There are some great ASX tech shares on offer right now. I’ve got a few ideas.
Some are flying high, but others are looking pretty good value after a recent decline.
I’m really interested in these ASX tech shares right now:
Class Ltd (ASX: CL1)
Class is an underappreciated ASX tech share in my opinion.
The bulk of the earnings comes from Class’ self-managed superfund (SMSF) software where it has close to 200,000 SMSF accounts spread across hundreds of accounting firms.
I’m not expecting a large amount of growth here, though it has an impressive retention rate and high margins.
What I particularly like right now is that that Class has made a few acquisitions that has significantly increased the company’s addressable market. It also gives Class the ability to cross-sell to the different client bases. Those acquisitions include NowInfinity, Smartcorp and ReckonDocs.
In FY21 Class is expecting that it will be able to generate 22% revenue growth at an underlying EBITDA margin (EBITDA explained) of at least 40%. That’s a good amount of growth in just one year.
I like the recurring nature of Class’ revenue, the steadily growing market share and the new products that it offers for more growth, such as Class Trust. There is a market of market share that Class can capture for companies and trusts that invest in shares.
Using CommSec numbers, the Class share price is valued at 24x the estimated earnings for the 2021 financial year.
Kogan.com Ltd (ASX: KGN)
Kogan.com is one of the leading beneficiaries from the boom of e-commerce over the last 12 months.
It has been a strange period of time with there being both a recession and booming retail sales for many ASX shares.
Kogan.com has done well at capturing a lot of that new business – its customer numbers, product categories and revenue have all increased significantly.
One of the things I like the most about this ASX tech share is that its margins are steadily rising. That’s a positive sign considering how much investing it is doing to keep growing the business.
I also believe that the increased amount of paying Kogan members and extra services offered, like insurance, is a great combination – it means that it can generate more profit from that consumer if it can get them to sign up.
I wouldn’t expect Kogan.com’s profit to grow by more than 100% per annum forever, but it looks good value to me at 22x the estimated earnings for the 2022 financial year according to Commsec.
