Long-term investing is definitely the way to go. When you combine that with ASX tech shares, the result could be pretty good.
Not every tech share is worth owning. There are some that aren’t exposed to attractive trends. Others aren’t generating much revenue or profit growth.
But these two investments could be really good ideas:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is one of the ASX tech shares on my watchlist. It facilitates donations to large and and medium US churches.
The company has a number of the things that I like to look for. It has a very large addressable market. Many billions of dollars are donated each year. That’s why Pushpay thinks that it can reach US$1 billion of annual revenue in the future. In FY21 it made ‘just’ US$127.5 million of revenue (up 40% for the year).
Management also believe that the business can become much more profitable, in terms of its profit margin. The EBITDAF margin (EBITDA explained – the F stands for foreign currency) has risen from 9% in FY19, to 22% in FY20, to 34% in FY21.
The ASX tech share is demonstrating growth in the right areas. It’s planning to invest in the Catholic segment and create a good market share there. This could unlock more revenue and profit over the next few years.
Over the long-term, Pushpay could expand overseas which could open up an even bigger total addressable market.
The business is already generating a very impressive amount of cashflow which could just keep rising.
Betashares Cloud Computing ETF (ASX: CLDD)
I think that cloud computing has a long way to go. This ASX tech share is an exchange-traded fund (ETF) that is invested in global businesses that predominately provide services via the cloud (internet).
There’s still a huge amount of global infrastructure that isn’t on the cloud (though changing to the internet does raise some potential issues, such as security).
This ETF has an annual management fee of 0.67%, which isn’t bad for how different this portfolio is compared to a typical global portfolio.
It has a total of 36 positions. You’ve probably heard of some of the positions in the portfolio such as: Dropbox, Zoom Video, Shopify, Salesforce, Twilio, Netflix, Xero Limited (ASX: XRO), Amazon, Microsoft, Alphabet and Alibaba.
Whilst there’s likely to be volatility in the short-term, I think the growth outlook for this group seems positive.
