It hasn't been the best year for Australia's leading tech companies. Year to date the S&P/ASX 200 Info Tech (Index: ^AXIJ) (ASX: XIJ) has declined 2%, compared to a solid 4.5% rise in the benchmark S&P/ASX 200.
But I predict a return to form for the sector next year thanks largely to a growing number of emerging tech companies with enormous potential.
Three tech shares I would buy this Christmas are as follows:
Aconex Ltd (ASX: ACX)
The former market darling has come under a great deal of selling pressure in 2016. I believe this is down to the price its shares were trading at, rather than any concerns over the quality of the company. At the current price I believe Aconex is great value considering its growth forecasts. If management delivers on its promise of sales growth between 39% and 46% in FY 2017 I believe market sentiment will shift quickly.
Afterpay Holdings Ltd (ASX: AFY)
Although Afterpay's shares are certainly on the expensive side at 128x full year sales, the payments company has grown at an explosive rate in the last 12 months. Pleasingly this has continued into the new financial year. In the first quarter of FY 2017 management advised that underlying merchant sales rose 95% on the previous quarter. I expect this to continue as its interest-free buy now, pay later, service attracts more new customers. Super Retail Group Ltd (ASX: SUL) is the most recent new client, bringing the total retailers on the platform to over 1,500.
Altium Limited (ASX: ALU)
Altium's printed circuit board design software continues to grow in popularity due to the thriving Internet of Things market. In FY 2016 the company reported an 11% jump in subscriptions to 31,314. This helped the company deliver a 17% increase in revenue to US$93.4 million. Approximately 53% of this revenue was recurring revenue. Management appears confident that this strong growth will continue for the foreseeable future. According to its recent presentation the company is on course to grow revenue to US$200 million by 2020. I think this makes it a great buy and hold investment.
