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 iPad.

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 smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »