2 quality ASX 200 tech shares with 'years of growth' ahead: broker

Here are the ASX 200 tech stocks this expert thinks are buys right now.

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Key points

  • The ASX 200 tech sector has plunged 20% since the start of 2022
  • The dip has left some shares in the bargain bin, with price-to-earnings (P/E) ratios dropping by as much as 33%
  • Here are 2 ASX 200 tech shares Montgomery Investment Management's Roger Montgomery thinks are buys right now

The S&P/ASX 200 Index (ASX: XJO) officially fell into correction territory late last month after tumbling more than 10% in the first few weeks of 2022.

And the stocks hit hardest? Tech shares. The S&P/ASX 200 Info Tech Index (ASX: XIJ) is still down 20% year to date.

Fortunately, the generally indiscriminate drop has created many buying opportunities, according to Montgomery Investment Management  chair and chief investment officer, Roger Montgomery.

Let's take a look at 2 of the ASX 200 tech shares he thinks are trading for bargain prices.

Is now the time to buy ASX 200 tech shares?

"The current equity correction has taken a lot of the froth out of the market," Montgomery wrote in a piece published by Livewire. "But caught up in the carnage have been a number of high-quality companies with years of growth ahead."

And carnage it has been. The market – particularly that of tech stocks, due to how they're valued ­– has been dragged down amid talks of rising rates.

However, Montgomery believes there are now some beaten-down tech shares investors could take advantage of this year.

"The current equity correction will cull much of the leverage and froth built up in recent years," he said. "What it won't do is change the course of growth for many high-quality companies."

He comforted wary investors, saying setbacks are a normal part of the market and investing cycle. He continued:

The market has been swinging manic-depressively for centuries. From wild bouts of optimism – when only the most enthusiastic appraisals will be entertained, to periods of deep depression – when sellers are willing to sell even the best companies for cents in the dollar, investors can count on one thing: opportunity.

Now is therefore the time to rebalance portfolios, taking advantage of the lower prices and [price-to-earnings (P/E)] deratings that have been experienced by some of the highest quality names in the market.

And what are those names? Here are the 2 ASX 200 tech shares Montgomery thinks are going cheap after the tech sell-off.

2 ASX 200 tech shares trading for a bargain

Megaport Ltd (ASX: MP1)

Megaport is No. 1 on Montgomery's list of beaten down stocks with strong valuations.

The expert says it's P/E ratio has tumbled 33.7% since 4 January, putting it squarely in the bargain zone.

The Megaport share price has slipped 28% year to date to trade at $13.69 at Tuesday's close.

REA Group Limited (ASX: REA)

While REA doesn't have a home in the ASX 200 tech sector, it does operate online-only real estate advertising platforms.

It houses realestate.com.au, flatmates.com.au, and Mortgage Choice.

Montgomery says REA's P/E ratio has dropped 15.9% year to date.

It's shares' value has also fallen 19% since the start of 2022 to reach $137.95.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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