The tech sector certainly has been a difficult place to invest in 2022. Rising interest rates have weighed heavily on valuations and sent many ASX tech shares crashing lower.
And while Bell Potter remains cautious on the outlook for the tech sector in the first half of 2023, it still sees opportunities for investors.
The broker notes that it is "attracted to stocks in the tech sector with reasonable cash flows/ earnings now or in the short term and which also have reasonable to strong growth outlooks."
It believes "these sorts of stocks will perform well – even in a rising interest rate environment – given the outlook of slowing growth and the risk of recession globally."
With that in mind, listed below are the broker's three top ASX tech shares to buy in 2023:
Frontier Digital Ventures Ltd (ASX: FDV)
Bell Potter is a fan of this digital classifieds company and has a speculative buy rating and $1.23 price target on its shares. It commented:
FDV remains catalyst rich owing to its private equity-style portfolio management, noting FDV LATAM was recently valued at 5.0x CY22e revenue and portfolio crown jewel Zameen generated a likely valuation uplift following a funding round by its majority owner, EMPG, with both assets flagged for listings down the track. Although the operating environment remains uncertain, a China re-opening and tapering/pivot of US interest rates would potentially be a positive for performance in emerging markets.
IkeGPS Group Ltd (ASX: IKE)
Another ASX tech share that the broker is positive on is this integrated GPS data capture device provider. Bell Potter currently has a speculative buy rating and $1.21 price target on its shares. It explained:
IKE delivers operational efficiencies within Utilities and Communications companies and related Engineering firms by replacing legacy processes with hardware and software solutions. In addition to posting 1H23 revenue growth of 169.8% vs. pcp to $15.4m, which was roughly equal to its full year FY22 revenue of $16m, IKE also delivered a maiden interim positive operating cash flow and statutory net profit. The result was driven largely by increasing transaction volumes as use of its software and services grows within IKE's enterprise clients. IKE's business activity is underpinned by the $310 billion fibre and 5G rollout in North America, which offers IKE the opportunity to embed its solutions within clients.
Life360 Inc (ASX: 360)
Finally, Bell Potter remains very positive on this location technology company and has a buy rating and $9.00 price target on its shares. The broker believes Life360 is well-placed for further strong growth in 2023 thanks to price increases and the bundling of recently acquired products. It commented:
Life360 develops and delivers a mobile app for families – called Life360 – that provides communications, driving safety and location sharing. The company has also recently made two acquisitions – Jiobit and Tile – so that now it not only connects and protects people but also pets and things. The core business has been performing very well though the acquisitions have had a difficult 12 months (due to supply chain constraints and/or a drop in consumer electronics demand). The outlook for 2023, however, is positive with recent price rises in the core business likely to drive strong top line growth and the bundling of Tile products with subscriptions to provide a further boost to subscription revenue.
