Plenty of the ASX tech shares are going through a rough time during this selloff. There could be some really good businesses now trading at prices that are much better value.
Just because a share price is lower doesn’t mean those businesses aren’t as good quality as they were before. At a lower price, they could be even better to think about.
Xero Limited (ASX: XRO)
The Xero share price has fallen by almost 25% over the last month. That’s a big decline considering it’s one of the biggest businesses on the ASX.
Some value-focused investors may have said the Xero share price was overvalued before, but the major selloff has brought it back to more reasonable levels.
It still has a lot of growth potential because of how much of a shift there is still to go from non-cloud to cloud accounting software. Not only does Xero give clients very convenient, constant access to their financials but it also has a large array of automated processes that business owners and accountants can take advantage of.
The ASX tech share’s subscribers keep going up, as does the annualised monthly recurring revenue – in FY21 it was up 20% to 2.74 million and up 17% to NZ$963.6 million respectively.
I think the long-term focus of Xero will continue to see it deliver excellent results for shareholders.
Redbubble Ltd (ASX: RBL)
Redbubble is one of most promising e-commerce ASX shares in my opinion. But, the Redbubble share price has dropped by 37% over the last month alone.
It’s now cycling against strong revenue performance from a year ago. But growth remains strong. The FY21 third quarter saw marketplace revenue growth of 54% to $103.4 million and gross profit increased 55% to $39.8 million. Operating expenses only grew by 3%, causing EBITDA (EBITDA explained) to increase by $8.5 million to $2.2 million and EBIT surged 91% to a loss of $0.9 million.
Investors didn’t seem to like that Redbubble was committing to a lot of spending to try to grow as much as possible over the next few years.
There’s a lot of merit for the artist product business wanting to grow. Much higher levels of volume should lead to multiple scale benefits, leading to higher long-term profit margins. This should create much more value for shareholders over time.
Altium Limited (ASX: ALU)
The Altium share price has dropped almost 20% over the last month.
Altium wants to be the world leader in electronic PCB design. It’s used by engineers around the world to create the products of the future, such as cars and loads of other electronics.
Altium shares are currently lower than they were at the bottom of the COVID-19 crash. Conditions have certainly weakened for the ASX tech share. Its revenue, growth and profit margins are lower than it would have been hoping if COVID had never happened. However, if it can continue towards market dominance this decade then it’s definitely worth owning for the next several years.
It has a strong balance sheet and Altium is constantly investing in its products to offer a better service to existing clients and win over new ones.
There are quite a few other ASX growth shares that could be good ideas in this troubled market.
