ASX tech shares are among the best businesses for Aussies to own in my opinion. There are great ones to buy in February 2021.
Certain sectors of the ASX tech sector look like they may be a bit stretched at the moment, businesses like Afterpay Ltd (ASX: APT) and REA Group Limited (ASX: REA) are a lot higher than they were a year ago.
But there are a few ASX tech shares that may still be worth a buy:
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
I like finding sectors that seem like they have good overall growth potential. One of those ideas is the gaming industry. Gaming has been around for decades and I don’t think that’s going to change any time soon, if ever. The e-sports category is just getting bigger and bigger. COVID-19 in-particular has caused a shift in how people seek entertainment.
Not only does this investment give exposure to a very interesting sector, but because it’s an ETF we get diversification to (currently) 25 holdings.
The top ten positions in the ETF account for 61.6% of the portfolio. The names of those companies are: Tencent, Nvidia, Bilibili, Sea, Advanced Micro Devices, Netease, Nintendo, Activision Blizzard, Take Two Interactive Software and Electronic Arts.
Over the past five years, the index that the VanEck Vectors Video Gaming and eSports ETF tracks has produced returns of an average of 38.9% per year.
Pushpay Holdings Ltd (ASX: PPH)
There are plenty of quality businesses on the ASX, like Xero Limited (ASX: XRO). But I think Pushpay is the one that represents the best value.
Looking at the forward earnings estimates on CommSec for the digital donation business, Pushpay shares are priced at 22 times the estimated earnings for the 2023 financial year.
Pushpay is a really attractive business in my opinion. It helps large and medium US churches. It’s proving to have very strong economies of scale – in HY21 the EBITDAF margin (EBITDA explained, the F stands for foreign currency) jumped from 17% to 31%. I wouldn’t expect HY22’s EBITDAF margin to be 45%, but I think it shows that Pushpay can be even more profitable than it is today.
I also believe that Pushpay’s revenue is more defensive than some investors think – people have kept giving to their church even during the COVID-19 recession. Pushpay still has plenty of growth levers that it can pull. It can expand to smaller churches in the US, it can expand into different religions and it can grow in different countries.
Pushpay is my top ASX tech share idea at the moment, but there are ASX growth shares out there that look promising like Redbubble Ltd (ASX: RBL).
