ASX tech shares could be the best place to look for opportunities in September.
There has been plenty of declines on the ASX share market this year.
As investing theory goes, the higher interest rates go, like we’re now seeing now, the more it should hurt asset values, so it’s not surprising that ASX tech shares have been sent downhill.
My investing nose is sniffing for opportunities at all of these lower prices. I’d love to own these two:
Airtasker Ltd (ASX: ART)
This is one at the top of my watchlist because of how much growth potential it has. It has a website that allows people to advertise jobs that need doing, while workers and businesses can offer to do it.
Not only does the business have a good presence in Australia already, but it has its sights on the US and UK markets, which are multiples bigger than the Australian market. It’s showing good double-digit revenue growth. If the ASX tech share can keep growing at this pace for a number of years then it can become a much bigger business, with strong underlying profitability thanks to a very high gross profit margin.
The large array of services that can be utilised on the site give it a very large total addressable market to try to capture. There are plenty of other markets it can expand to in the future such as Canada and South Africa. I think it has a long growth runway, and the cashflow that it can generate seems strong.
Xero Limited (ASX: XRO)
It’s hard to think of a higher quality ASX tech share than Xero. The business provides cloud accounting (including payroll) software for small and medium organisations around the world. It has built up a large position in New Zealand, Australia and the UK. It wants to grow in countries like Canada, South Africa and Singapore.
I like that the business is investing heavily for growth, as that’s what will drive the most value for shareholders over time. Growing its subscriber base, total revenue and scale is good for long-term returns and margins.
With a high (and growing) gross profit margin, I think its underlying profitability is very high. I’m curious to see how Xero expands its reach into the small business ecosystem in the coming years.
If the ASX tech share can keep growing its subscriber base and average revenue per user (ARPU), I think the business has a compelling future.
