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Why tech investors should watch the Tesserent (ASX:TNT) share price next year

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Unless you’re a big tech investor, the Tesserent Ltd (ASX: TNT) share price may not be on your radar right now. However, there’s now one big reason why this ASX small-cap could rocket up the watchlist in 2021.

What does Tesserent do?

Tesserent is Australia’s largest ASX-listed cybersecurity company. The company listed on the ASX in 2016 and has quickly amassed a market capitalisation of more than $300 million.

The company has key clients in a number of sectors including federal, state and local governments alongside financial services and property development.

Why the Tesserent share price is worth watching

The big news from the company today is its looming addition to the S&P/ASX All Technology Index (ASX: XTX). According to the ASX, the index comprises companies that have “not yet graduated” to the S&P/ASX 300 Index (ASX: XKO), representing smaller businesses that “may have greater room for growth”.

The Tesserent share price is one to watch following the announcement, as it joins Marley Spoon Ag (ASX: MMM) amongst the latest index additions.

Index additions like this are often good news for companies looking to increase their liquidity and information coverage.

Why is Tesserent joining the All Tech Index?

The move comes on the back of strong share price and earnings growth for Tesserent. The group’s internet Security-as-a-Service offering has proven popular amongst a broad cross-section of the economy.

The company has posted 135% year on year earnings before interest, tax, depreciation and amortisation (EBITDA) growth in 2020. That has seen the Tesserent share price rocket 775.0% higher since the start of 2020 to $0.35 per share.

Foolish takeaway

The index addition news is just the latest positive in a big year for Tesserent and its shareholders. The Tesserent share price will be worth watching in the new year following its addition to the All Tech Index to cap off a solid 2020 performance.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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