If you're looking to invest in the tech sector, then check out the two tech shares listed below.
Both of these ASX tech shares have been named as buys and tipped for strong growth in the future. Here's what you need to know:
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Aristocrat Leisure Limited (ASX: ALL)
The first ASX tech share to look at is Aristocrat. It is a leading gaming technology company with a portfolio of popular poker machines and mobile games.
The team at Morgans is very positive on the company's outlook. This is due to its high quality gaming portfolio, its strong balance sheet, and its plans to move into real money gaming.
The broker summarised its bullish view. It said:
We expect ALL to continue to take market share in all its product segments. Demand for its gaming machines and digital games is resilient to economic cycles. […] With $3.3bn of currently available liquidity, ALL has significant funding capacity for growth, even after the buyback. It has a stated ambition to build a meaningful presence in the rapidly growing online real money gaming segment, which we believe may be achieved both through organic investment and inorganic acquisitions.
Morgans currently has an add rating and $43.00 price target on Aristocrat's shares. Based on the current Aristocrat share price of $35.74, this implies potential upside of 20% for investors.
Readytech Holdings Ltd (ASX: RDY)
Another ASX tech share that could be worth considering is Readytech. It is a growing provider of enterprise software to defensive market verticals such as higher education, human resources, work pathways, and local government.
Analysts at Goldman Sachs are fans of the company due to its high recurring revenue and strong position in defensive areas of the market that are under-served by large enterprise software competitors. Morgans feels that this bodes well for the company's performance in the current environment.
The broker commented:
In our view, RDY will continue to grow mid-teens organically while making accretive acquisitions (such as IT Vision), with profitability underpinned by solid software metrics including low churn at ~3% and high LTV/CAC. RDY serves defensive end markets (e.g. higher education, local government) and has high recurring revenue (>85%) which should protect the company's earnings profile in an economic downturn.
Goldman has a buy rating and $4.60 price target on Readytech's shares. Based on the current Readytech share price of $3.02, this suggests potential upside of 52% for investors.
