Australia has a small but fast-growing ASX tech sector. Some of these listed companies have already made it to the S&P/ASX 200 Index (ASX: XJO).
Here we look at 3 of those companies, all of which I believe are good options to buy and hold for the long term.
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WiseTech Global Ltd (ASX: WTC)
WiseTech Global is the leading global developer of software solutions to the logistics industry. The company has a strong and entrenched position in this market.
The WiseTech share price fell heavily from mid-February to mid-March by more than 60%. The company's supply chains were significantly impacted during the early phase of the coronavirus crisis. As a result, the company downgraded its earnings projections for FY2020 back in February to between 5% and 22% year-over-year growth.
Since then, the WiseTech share price has rallied strongly and regained about half of those losses. Global markets are now beginning to open up, especially the Chinese market. This should hopefully lead to further uplift in sales.
More challenges in the months ahead may lead to additional share price volatility for WiseTech. However, I believe that its long-term growth prospects remain strong, driven by the growing demand for logistics solutions.
Appen Ltd (ASX: APX)
Appen provides data for use in machine learning and artificial intelligence (AI) and is the global leader in this field.
In a market update last week, Appen commented that its earnings base continues to be resilient. This is in spite of challenging market conditions. So far, there has been negligible impact on its customer base, except for some smaller customers.
Appen further revealed that its balance sheet continues to be strong with cash in excess of $100 million. It will also continue to invest in technology areas that will help achieve its long-term growth trajectory.
I think that Appen remains well placed for strong growth over the next 5 years. This will be driven by the rapidly rising demand for AI products and machine learning solutions.
Altium Limited (ASX: ALU)
Altium designs software that enables engineers to manufacture printed circuit boards for a broad range of devices. This includes everything from computers to cars and the growing number of interconnected devices that make up the 'internet of things' (IoT).
Altium has recently experienced challenges to sales, especially at the smaller end of its target market. It recently noticed signs of distress amongst some start-ups and other smaller customers.
Despite these short-term challenges, I believe that Altium's long-term future still remains bright. It has a strong balance sheet and has continued to grow its margins over the past few years.
In particular, IoT is a rapidly growing sector. This provides Altium with plenty of scope to grow strongly over the next 5 to 10 years.
