The tech sector was on form again last year and outperformed the market average. Given the quality on offer in the sector, I don’t think this is surprising.
Whether or not this positive trend will continue in 2021, only time will tell. But two tech shares that have been tipped as potential market beaters are listed below. Here’s why they could be in the buy zone:
Appen Ltd (ASX: APX)
The first tech share to look at is Appen. It is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. As these markets are growing rapidly in size and importance, demand for its services is expected to increase very strongly in the coming years.
And while the pandemic is putting a dampener on things in FY 2021, management appears confident that demand will accelerate once the crisis passes and its strong form will resume.
According to a recent note out of Citi, its analysts have a buy rating and $32.60 price target on the company’s shares. This compares to the latest Appen share price of $24.91. The broker remains very positive on its long term growth prospects and appears to believe its recent share price weakness is a buying opportunity.
Jumbo Interactive (ASX: JIN)
Another tech share to consider is Jumbo Interactive. It is an online lottery ticket seller and best-known as the operator of the Oz Lotteries website.
While the Oz Lotteries website is easily the biggest contributor of revenue at present, this looks set to change in the future. This is due to the company’s Powered by Jumbo SaaS business, which is expected to be the key driver of growth over the 2020s.
Management notes that this business is in a strong position to benefit from the shift online of lotteries globally. It estimates that it has a US$303 billion global total addressable market, with just 7% of this market online at the moment.
Analysts at Goldman Sachs are positive on the company. The broker has an overweight rating and $14.50 price target on the company’s shares.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.