Technology shares have taken a considerable tumble since the market turned on them a few months ago.
Despite a rebound this month, the S&P/ASX All Technology Index (ASX: XTX) is still about 10% off its February high.
The trouble is that most high-flying tech companies are considered future-potential growth shares. The market is currently fearing a rise in inflation from the post-COVID economic recovery.
A rise in inflation can lead to higher interest rates, which are poison to stocks relying on the power of future earnings.
But despite this climate, there are still pockets of tech that Wilson Asset Management portfolio manager Tobias Yao has faith in.
"We still have a little bit of tech exposure, but our ideas are now concentrated on companies with reasonable PE multiples," he told a Wilson video.
"And these companies aren't COVID beneficiaries."
Yao looks after the portfolios of listed investment vehicles WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX), WAM Microcap Ltd (ASX: WMI) and WAM Active Limited (ASX: WAA).
He named 5 stocks that fit the "reasonable" price-to-earnings criteria that these Wilson funds still hold:
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Aristocrat Leisure Limited (ASX: ALL)
The company best known for its poker machines is these days earning significant revenue out of more modern channels.
"Actually over 50% of its business now is now online digital gaming," said Yao.
Aristocrat stocks were down 0.18% to trade at $40.84 on Friday afternoon. It started the year at $31.39.
Carsales.Com Ltd (ASX: CAR)
Yao was positive on the Australian online marketplace last month acquiring the US business Trader Interactive.
"We really like the recent acquisition, but also we like the transition [of] the transaction model going forward," he said.
"We think that's going to permanently lift the revenue growth profile over the medium term."
Carsales stocks were trading at $19.38 on Friday afternoon, which is down 2.66% on the year.
Codan Limited (ASX: CDA)
Wilson funds have "a large holding" in Codan, according to Yao.
"[It's] one of the global leaders in metals detection and communications hardware."
The company this month announced a deal to sell-off its resources technology provider brand Minetec to Caterpillar Holdings Australia.
Unfortunately, the market wasn't a big fan of the $14 million transaction, sending the shares down from its 52-week high reached in late May.
Codan stocks were going for $18.54 on Friday afternoon, which was down 1.38%.
Atomos Ltd (ASX: AMS) and Vista Group International Ltd (ASX: VGL)
In the small cap space, Yao revealed these were the two technology companies that survived his PE ratio cull.
"Atomos is an innovative monitor recorder business and Vista Group… is the leader in software solutions for cinemas."
Atomos shares are up 1.55% this year, while Vista has risen a whopping 35.7%.
"So there are definitely still pockets of opportunities, but it's fair to say we've become a lot more selective in where we deploy our capital."
