Carsales (ASX:CAR) and 4 other ASX tech shares still worth holding: analyst

Technology stocks have taken a beating in recent months, but this analyst is still keeping these 5 'low PE ratio' companies in the portfolio.

man using laptop happy at rising share price

Image source: Getty Images

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

Technology shares have taken a considerable tumble since the market turned on them a few months ago.

Despite a rebound this month, the S&P/ASX All Technology Index (ASX: XTX) is still about 10% off its February high.

The trouble is that most high-flying tech companies are considered future-potential growth shares. The market is currently fearing a rise in inflation from the post-COVID economic recovery.

A rise in inflation can lead to higher interest rates, which are poison to stocks relying on the power of future earnings.

But despite this climate, there are still pockets of tech that Wilson Asset Management portfolio manager Tobias Yao has faith in.

"We still have a little bit of tech exposure, but our ideas are now concentrated on companies with reasonable PE multiples," he told a Wilson video.

"And these companies aren't COVID beneficiaries."

Yao looks after the portfolios of listed investment vehicles WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX), WAM Microcap Ltd (ASX: WMI) and WAM Active Limited (ASX: WAA).

He named 5 stocks that fit the "reasonable" price-to-earnings criteria that these Wilson funds still hold:

Aristocrat Leisure Limited (ASX: ALL)

The company best known for its poker machines is these days earning significant revenue out of more modern channels.

"Actually over 50% of its business now is now online digital gaming," said Yao.

Aristocrat stocks were down 0.18% to trade at $40.84 on Friday afternoon. It started the year at $31.39.

Carsales.Com Ltd (ASX: CAR)

Yao was positive on the Australian online marketplace last month acquiring the US business Trader Interactive.

"We really like the recent acquisition, but also we like the transition [of] the transaction model going forward," he said.

"We think that's going to permanently lift the revenue growth profile over the medium term."

Carsales stocks were trading at $19.38 on Friday afternoon, which is down 2.66% on the year.

Codan Limited (ASX: CDA)

Wilson funds have "a large holding" in Codan, according to Yao.

"[It's] one of the global leaders in metals detection and communications hardware."

The company this month announced a deal to sell-off its resources technology provider brand Minetec to Caterpillar Holdings Australia.

Unfortunately, the market wasn't a big fan of the $14 million transaction, sending the shares down from its 52-week high reached in late May.

Codan stocks were going for $18.54 on Friday afternoon, which was down 1.38%.

Atomos Ltd (ASX: AMS) and Vista Group International Ltd (ASX: VGL)

In the small cap space, Yao revealed these were the two technology companies that survived his PE ratio cull.

"Atomos is an innovative monitor recorder business and Vista Group… is the leader in software solutions for cinemas."

Atomos shares are up 1.55% this year, while Vista has risen a whopping 35.7%.

"So there are definitely still pockets of opportunities, but it's fair to say we've become a lot more selective in where we deploy our capital."

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Atomos Ltd and Vista Group Intl. The Motley Fool Australia owns shares of and has recommended Vista Group Intl. The Motley Fool Australia has recommended Atomos Ltd and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A man clenches his fists in excitement as gold coins fall from the sky.
Technology Shares

Guess which ASX 300 tech stock is jumping 11% on big news

Let's see what is getting investors excited about this tech stock today.

Read more »

Five people in an office high five each other.
Technology Shares

5 best performing ASX 200 tech shares of FY25

Some of the technology sector's biggest names led the charge in share price growth last financial year.

Read more »

Happy man and woman looking at the share price on a tablet.
Technology Shares

Tech takeover – two Aussie technology shares to watch

These two tech shares could be undervalued according to this broker. 

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Technology Shares

Guess which ASX tech stock is racing higher on big news

This tech stock is making a key acquisition.

Read more »

drone technology, drone defence, woman operating drone
Technology Shares

Was it a good idea to buy DroneShield shares in FY25?

Did this counter drone technology company deliver the goods for investors? Let's find out.

Read more »

Broker looking at the share price.
Technology Shares

Can the Xero share price deliver a 17% return after the US acquisition?

Can investors generate strong returns after Xero’s US acquisition?

Read more »

A corporate female in a suit stands in front of a huge holographics virtual reality screen with shapes and lights and pictures
Technology Shares

Bell Potter names the best ASX tech stocks to buy in FY 2026

Looking for tech sector exposure? These shares could be worth considering.

Read more »

Man on computer looking at graphs
Technology Shares

$8,000 invested in Xero shares 1 year ago is now worth…

Xero shares have raced ahead of the benchmark over the past year.

Read more »