2 ASX tech shares I’d buy right now: expert

Lingering inflation and rising interest rates have killed the spirits of growth stocks. But here are a couple of technology gems worth considering.

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The prospect of persistent inflation and rising interest rates has deflated enthusiasm for growth shares, especially in technology.

However, the ASX still offers up some gems if you know where to look (or who to ask).

Wilsons investment advisor Peter Moran this week nominated a couple of ASX tech shares that he likes the look of:

ASX share with ‘recurring revenue and strong margins’

ReadyTech Holdings Ltd (ASX: RDY) is a maker of people management software with clients in many industries, although it rakes in much of its revenue from the education sector.

Its shares have risen 82% this year and the business has a market capitalisation of more than $400 million.

But it doesn’t seem to attract much attention. The last we heard on The Motley Fool, the stock was charging higher back in September after a strategic acquisition.

Moran reckons the software maker deserves more kudos, according to The Bull.

“This software-as-a-service business is attractive for its high levels of recurring revenue and strong margins. Both are driven by the quality of its software.”

He is rating the stock as overweight while forecasting further growth.

“ReadyTech recently highlighted a potential opportunity to move existing payroll customers to a new superior product that’s more profitable.”

According to CMC Markets, 3 of 4 analysts rate ReadyTech as a strong buy, with the other broker labelling it as a moderate buy.

Tech business that’ll be cash flow positive this year

Shares for fintech Plenti Group Ltd (ASX: PLT) struggled initially after floating in September last year.

But in 2021, the stock has steadily headed up to show a return of 22% so far.

This is another ASX tech share that’s gone under the radar somewhat, with just 3 analysts covering the business.

According to CMC Markets, 2 of them rate Plenti as a strong buy with the third analyst rating it as a moderate buy.

Moran agrees that it’s a tempting purchase at the moment.

“We expect Plenti to reach a $1 billion loan book and become cash flow positive by the end of December this year,” he said.

“Our rating is overweight.”

Last month’s performance update for the second quarter showed encouraging signs, according to Moran. Plenti shares actually headed up 7% on the day.

“The second quarter update confirmed continuing strong loan origination across all three of its lending segments. Loan origination increased from $3.3 million a day in the first quarter to $3.9 million a day in the second quarter.”

The Sydney company now has a market capitalisation of $238.5 million.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd. 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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