ASX tech shares look like a good sector to be focused on, in my opinion.
Sometimes the sector that has been hurt the most could be the place to go hunting because sentiment is so low.
While not every tech business is guaranteed to be a good choice, I think there are a number of interesting choices worth considering due to their growth potential and impressive margins.
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Betashares Nasdaq 100 ETF (ASX: NDQ)
This isn't a single business. It's an exchange-traded fund (ETF) that is invested in a range of different tech stocks.
Many of the largest holdings will probably be familiar to readers. We're talking about names like Apple, Microsoft, Amazon.com, Tesla, Alphabet, Meta Platforms, and Nvidia.
There are plenty of others in the portfolio such as Broadcom, Cisco Systems, Texas Instruments, Adobe, Qualcomm, Advanced Micro Devices, and Intel.
It has been a solid performer in the last few years, despite the plunge seen this year. At 31 August 2022, the Betashares Nasdaq 100 ETF had returned an average of 16.4% per annum over the prior three years. But, that doesn't mean that the next three years will be as strong.
Since the start of 2022, the ASX tech share has dropped by 25%. I like the diversification and tech exposure offered by this investment option.
Pushpay Holdings Ltd (ASX: PPH)
The Pushpay share price recently suffered a 10% plunge on news that a takeover was no longer likely to go ahead for the donation and church management software company.
However, I think this now represents a compelling opportunity for investors to look at the business.
This is despite investor worries that the normalisation of COVID-19 conditions would lead to the business suffering.
Revenue rose 13% in FY22 and it's expecting between 10% to 15% revenue growth in FY23. Operating profit may be a bit lower in FY23 as the business invests for future growth.
It's expecting "strong growth" in FY24 onwards with "significant revenue growth and increasing profitability".
In FY22, total processing volume increased by 10% to US$7.6 billion. By FY25, it's expecting its total processing volume to grow to more than US$10 billion, which suggests a rise of more than 30% between now and then.
I think the entry into the Catholic segment is a smart move by the ASX tech share because it diversifies and expands the potential Pushpay customer base.
If it can keep growing revenue in the coming years, while growing profit faster than revenue, I believe that the Pushpay share price represents compelling value at this lower level.
