2 ASX tech shares that might be buys in July 2021

ASX tech shares could be the right place to look for opportunities in July 2021. Technology companies can have a …

| More on:
A man activates an arrow shooting up into a cloud sign on his phone, indicating share price movement in ASX tech shares

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

ASX tech shares could be the right place to look for opportunities in July 2021.

Technology companies can have a strong margin if the operating model is very scalable. A lot of software products can be replicated for a very low cost to the company, but the ASX tech share can still charge its full price.

Here are two ASX tech shares to consider:

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

This is an exchange-traded fund (ETF). It's invested in large and smaller businesses that provide exposure to businesses involved in the video gaming world.

There are some businesses in the portfolio that are purely known for video games like Nintendo, Activision Blizzard, Take Two Interactive, Electronic Arts and Ubisoft.

Then there are others that produce a certain amount of earnings from video gaming-related activities such as Nvidia, Advanced Micro Devices, Tencent and Sea.

The video gaming sector has achieved revenue growth of 12% per annum since 2015. E-sports revenue has grown by an average of 28% per annum since 2015.

Competitive video gaming's audience is expected to reach 646 million people globally in 2023, driven in part by a rising population of digital natives, according to the Newzoo Global Esports Market Report.

VanEck shared a number of impressive facts about the video gaming industry. There are now more than 2.7 billion active gamers worldwide. The video game business is now larger than both the movie and music industries combined, making it a major industry in entertainment.

E-sports is considered the world's fastest-growing sport. The top e-sports tournaments are drawing crowds rivalling the World Cup (soccer) and the Olympic Games.

This ASX tech share has an annual management fee of 0.55%.

Kogan.com Ltd (ASX: KGN)

Kogan is an e-commerce business that sells a lot of different things through its website like appliances, electronic devices, clothes, drones and sporting goods. Some of the other things sold through the website includes insurance, superannuation and credit cards. The Mighty Ape acquisition in New Zealand gave it international growth potential and diversification.

The Kogan share price has fallen 41% over the last six months, meaning the price is now substantially cheaper.

Kogan has been working through excess inventory that was built up in response to its very quick growth. It's getting through that inventory by increasing promotional activity, which is leading to lower near-term gross margins and higher near-term marketing costs.

In FY21 it's expecting to report adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of between $58 million to $63 million.

But the ASX tech share's leadership are confident about the future. Kogan said:

The board looks to the future with confidence as the business has invested in key strategic initiatives and has a strong level of in-demand inventory heading into the first half of FY22 while observing price inflation through global supply chains. The initiatives that the company has put in place to address the rapid scaling of a large e-commerce company are expected to drive continuous customer experience improvements in FY22.

According to Commsec, the Kogan share price is valued at 24x FY23's estimated earnings.

Motley Fool contributor Tristan Harrison 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 Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended VanEck Vectors ETF Trust - VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another tough day for investors this Tuesday.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why HMC Capital, Platinum, Sigma, and Skycity shares are dropping today

These shares are having a tough session on Tuesday. But why?

Read more »

A close-up photo of a ballot box with an Australian flag in front of it and a gentleman's hands placing his vote in the 2022 election inside the box
Share Market News

How these ASX 200 stocks are primed to gain from Labor's resounding Federal election win

With the Federal election in the rear-view, which ASX 200 stocks should I buy now?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Dimerix, Evolution Mining, Inghams, and NextDC shares are charging higher today

These shares are rising when many are falling today. But why?

Read more »

Smiling young woman eating chocolate outdoors.
Share Market News

The See's Candies playbook for ASX investors

Two ASX businesses that remind me of Buffett’s sweetest investment.

Read more »

Man smiling at a laptop because of a rising share price.
Opinions

My 2 favourite ASX sectors to invest in

Finding your groove can help your investing success.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
Opinions

3 things I learned from Warren Buffett being the CEO of Berkshire Hathaway

The Oracle from Omaha is in his last year as CEO.

Read more »

A male ASX 200 broker wearing a blue shirt and black tie holds one hand to his chin with the other arm crossed across his body as he watches stock prices on a digital screen while deep in thought
Share Market News

5 things to watch on the ASX 200 on Tuesday

Here's what to expect on the local market today.

Read more »