Unfortunately for growth investors, the tech sector has been hammered over the last 12 months. This has been driven partly by the market's sudden aversion to loss-making companies as rates rise.
The good news is that not all tech shares are making a loss. The two listed below are highly profitable and growing at a strong rate. Here's why analysts think investors should snap them up today:
Objective Corporation Limited (ASX: OCL)
The first tech share to look at is software company Objective Corp. It provides content, collaboration, and process management solutions for the public sector in the Asia Pacific, USA and Europe.
Objective Corp recently released its full year results and reported a 15% increase in annualised recurring revenue (ARR) to $85.5 million and a 31% lift in net profit after tax to $21 million.
Goldman Sachs was impressed and remains bullish on the future. Particularly given the company's defensive end markets and strong track record of growth and margin expansion. It also sees upside being driven from new products and its US expansion.
In the meantime, Goldman is forecasting ARR growth of 18% in both FY 2023 and FY 2024.
In light of this positive outlook, the broker sees plenty of upside for the Objective Corp share price. It currently has a buy rating and $18.40 price target on its shares. This implies a 20% return for investors over the next 12 months.
TechnologyOne Ltd (ASX: TNE)
Another ASX tech share for investors to consider is enterprise software provider TechnologyOne.
It provides enterprise software to customers in the government, local government, financial services, health & community services, education, and utilities and managed services markets.
In FY 2021, TechnologyOne reported a net profit of $72.7 million. According to a note out of Bell Potter, its analysts are expecting this to grow by 18% to $85.7 million in FY 2022.
But the company's growth is unlikely to stop there. TechnologyOne is in the process of shifting to a software-as-a-service (SaaS) business model. This is expected to lead to the company having high recurring revenues and stronger margins. Management certainly has confidence in the shift. It continues to target the almost doubling of its ARR to $500 million by FY 2026.
Bell Potter also appears confident that the transition will be a success and is forecasting its strong growth to continue in the coming years. As a result, the broker currently has a buy rating and $14.25 price target on its shares. This implies potential upside of 23% for investors based on the current TechnologyOne share price.
