Tech stocks can be great sources of share price growth and good returns. Still, some investors may think they are too hard to understand and shy away from them. A lot of times they aren't using highly advanced rocket-science-style technology, but just using available technology in a new, innovative way.
I especially want to highlight several companies in this space – IRESS Ltd (ASX: IRE) and Infomedia Limited (ASX: IFM). They have been standout performers, although they may not be on the front pages of the news. They quietly work in the background, but their services are greatly sought after.
At the end of the day, they still have to sell products or services and make profit to be successful. If they can supply a demand or fulfil a customer need faster, cheaper or better with the technology, then you're onto a stock winner.
— IRESS
First, this financial information platform service provider allows wealth managers, financial planners and asset managers to invest, trade and oversee wealth creation through services such as XPLAN. It is one of the major platforms used in Australia and similar platforms are used in the UK by 95% of the top 100 wealth managers. Finance lenders there also use the company's multi-channel mortgage platform in one out of four mortgages which are transacted.
It offers similar services in Canada, South Africa and Singapore, becoming an integral part of its clients' businesses. With the recent acquisition of its UK business, revenue was up 17% in the second half of FY 2013. Consensus forecasts are for earnings to grow about 28% annually in the next two years. The nature of its software platform builds in repeat business as wealth managers adopt it as their primary business system.
— Infomedia
A humbly successful tech stock, Infomedia manages information about auto parts for the after sales parts and services sector. Again, it may not sound high-tech, but constant updating and management of part specifications, availability, storage and sales information is a must for businesses dealing in them. That's why Infomedia's service is so essential.
The annual results speak volumes of the company – sales up 17.4% and net profit rising 22% in FY 2014. As more and more data for parts and accessories goes online, its long experience and extensive database network makes it the "go-to" business for auto makers and repair service providers. Double-digit annual earnings growth is forecast over the next two years. By carving out a strong niche in the industry, Infomedia is a durable business and steady investment.
