Two exciting ways to play the Aussie tech sector

You overhear the strangest things in lifts. Yesterday, for instance, two teenage girls were chatting loudly in the lift in …

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You overhear the strangest things in lifts.

Yesterday, for instance, two teenage girls were chatting loudly in the lift in my apartment building. It was "Face-y" this and "Face-y" that. Only when one of them said (well, shrieked), "I could never post that on Face-y" did I understand.

Australian for tech

More than 50% of Australians — nearly 12 million people — use Facebook. It's the number-one social media site countrywide, with Google's Youtube running a close second and LinkedIn a distant third, according to data compiled by Adcorp.com.au in January. Of course, Facebook, Google, and LinkedIn are all listed on the Nasdaq in the U.S.

But such glimpses into Australians' enthusiastic adoption of social media and technology more generally gets an investor's mind working on local ways to play the phenomenon. Looking beyond the marquee names known to all, from Telstra (ASX: TLS) to Vocus (ASX: VOC), there are two under-the-radar ASX companies operating within the tech space that could whet local investors' appetites.

Idea #1: NextDC 

Headquartered in Brisbane, NextDC Limited (ASX: NXT) is an early-stage company looking to capture a piece of the "big data" pie. It operates data centers, providing digital storage and server space to small and large companies, and enabling Australian and Kiwi clients to take their operations to the cloud. As such, NextDC is one of the ASX's few pure plays on cloud computing.

While NextDC is not yet profitable, recording a loss of $10 million for the 2012 financial year, its top line is growing incredibly quickly. This includes a whopping 288% increase in revenue for the first half of its 2013 financial year. In this same period, the company saw customer growth topping 100%.

Idea #2: Wellcom Group

Wellcom Group Limited (ASX: WLL) is a less direct tech play, but still operates within the larger tech sector. A Melbourne-based marketing technology services agency, Wellcom helps other companies to manage their digital assets. Among its leading products is an SAS (software-as-a-service) program called Knowledgewell, used by a diverse range of companies. Blue chip clients already include National Australia Bank, retailer Kathmandu, and Jetstar.

What's more, Wellcom Group has recently announced growth initiatives, including keeping an eye on possible acquisitions, and has also announced its development of another software product, called Canopy, "a totally new software designed for retailers, distributors and manufacturers alike," which will be deployed throughout 2012 and 2013.

With a market cap nudging just $100 million, plus $15 million in cash and no debt, Wellcom Group should be able to capitalise on these initiatives.

Not a techie? Prefer regular dividend payments? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.

 

 

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »