Now’s the time to buy Xero (ASX:XRO) shares, say experts

Stocks for the Kiwi software maker are in an intriguing spot, reckon multiple analysts. Read why they’re so positive about the company

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Shares for cloud accounting software provider Xero Limited (ASX: XRO) have dipped more than 5% this year. But that’s after a glamorous 646% gain over the last 5 years. 

So does this mean the New Zealand company has now reached its potential and there’s nothing left in the tank?

Absolutely not, according to a couple of experts. In fact, they reckon now is the time to snap up some more Xero shares.

“It’s a profitable tech company, which is great,” Fairmont Equities managing director Michael Gable told Switzer TV Investing.

“I think it’s ready to make another run.”

Top ASX pick in the technology sector

An analyst note out of Credit Suisse Group AG (SWX: CSGN) this week agreed with Gable. The team there retained an “outperform” rating for Xero shares while lifting the price target to $160.

The stock closed Friday at $140.28, which means Credit Suisse is expecting a 14% upside.

In fact, The Motley Fool’s James Mickleboro reported that Xero is currently Credit Suisse’s top pick in the technology sector.

“Credit Suisse… believes the company is well-placed for growth,” said Mickleboro.

“Particularly (given) its positive subscriber growth outlook and its expectation for increases in its average revenue per user metric.”

Xero’s financial year ends on 31 March, so it will not be a part of the August reporting season frenzy.

Xero shares experiencing a ‘narrowing range’

Gable said that, after plateauing in December, Xero stocks have gone down and sideways. But price volatility is starting to narrow, which has piqued his interest.

“Over the last several months we’ve had the range start to tighten up,” he said.

“What that means is it’s had a massive run over the back end of 2020, it’s just consolidated that move, and now… it’s starting to break out of that range.”

Gable said he has been snapping up Xero shares in the past week for his clients. “This one’s on the move again, and it should just resume the uptrend from here.”

But it’s not too late to get in on the action, he reckons.

“It’s still at the start of that move,” said Gable. “If you’re looking to buy Xero I think it’s still a buying opportunity right here. It’s only just starting the move.”

If he’s proven correct, Gable forecasts Xero shares will trade at new all-time highs within the next few months.

Should you invest $1,000 in Xero right now?

Before you consider Xero, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Xero wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Tony Yoo owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. 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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