Shares in Xero Limited (ASX: XRO) are walking higher today and now trade 2% in the green at $100.96 apiece.
ASX tech shares have staged a sharp comeback rally in recent weeks as a wave of macroeconomic crosscurrents feed into global markets.
The S&P/ASX All Technology Index (ASX: XTX) is up 2% on the day and has charged 9% higher this past week as investors rotate back into high-beta tech shares.
Market pundits appear satisfied to take on risk in going long tech names once more. As Barrons reports, the US Fed provided more clarity on interest rates, and the Chinese government promised to keep its stock markets stable, providing a bullish backdrop for tech shares to surge.
Image source: Getty Images
What does this mean for the Xero share price?
As growth returns as a profitable investment theme in the back end of March, tech shares such as Xero could benefit immensely, some say.
According to Ben Clark Portfolio Manager at TMS Capital, Xero is one to look for once the market begins to trudge back north and the economy begins to settle.
"[Xero] has been one of our largest holdings, didn't report in the reporting season. It's such a resilient, consistent business. I don't think you're going to get any bad news from it," he said when speaking to Livewire.
Clark encourages market participants to think critically when analysing stocks like Xero, avoiding themes like 'hold on for dear life (HODL)' or 'buy and leave' in the process.
"It's [Xero] dropped 40% from its January one high," the portfolio manager remarked. "So don't put the blinkers on and think, "Oh, I've just got to hold tight." You still do have to think, is this a business that's going to come back when the market comes back?"
And will it come back, Mr Clark? And what will happen if and when it does? These are important questions, that thankfully, the money manager has the answers to.
"The market will come back," he told Livewire. "When growth starts to run, the businesses that reported really strongly in February, and it was just completely ignored, will be the first businesses to roar back."
Analysts at JP Morgan agree, noting Xero's strength as a market leader in cloud accounting to be a key driver for growth into the future.
"We believe XRO remains well positioned to capture the growth from increasing cloud penetration across cloud accounting," it said in a note last week.
"XRO has proven its credentials in the ANZ marketand is now looking to replicate its model in its international markets," it added.
Xero share price snapshot
In the last 12 months, the Xero share price has fallen more than 16% into the red and is now more than 28% in the red this year to date.
Over the past week and month, things have turned a corner, such that shares are now 8% and 2% in the green respectively.
