I think it’s a good idea to think about ASX tech shares for the long-term. There are some good growth options out there, but the biggest returns could be made over the next decade.
Technology businesses usually have strong operating models because of the nature of software – it can be very quick to distribute it to new customers and the cost of selling to that new customer is usually low.
That’s why I really like these tech businesses:
Altium Limited (ASX: ALU)
Altium is a business on the ASX with really promising long-term potential. Most devices need the help of electronic PCB software to design that item. Altium’s software is used by clients such as carmakers (Tesla, Toyota, BMW etc), tractor builders (John Deere), space organisations (NASA and Space X) and phonemakers (Apple). The world is just going to get more technological, so Altium will be even more essential as long as it can stay ahead of competitors with offerings like Altium 365.
One of the great things about Altium is that it’s trying to lead the development of the industry and eventually dominate. A stronger market position should be able to lead to higher profit margins over time and the ability to be involved in more parts of the design and manufacturing process.
Altium is highly motivated to become the world leader and, given time, I think it can get there whilst delivering good shareholder returns.
Redbubble Ltd (ASX: RBL)
Redbubble is another ASX tech share that’s aiming to be one of the main global players in its category. If you’ve not heard of Redbubble before, it’s a business that owns two websites selling artist-produced products – think of things like wall art, clothes, phone cases and, more recently, masks.
There was a trend towards online shopping, but then COVID-19 has quickly accelerated the adoption. Redbubble is benefiting significantly from this.
One of the most exciting thins about Redbubble is that it keeps launching new product lines, such as masks, which expands its total addressable market and brings more artists & potential customers on board.
I’m not sure how big Redbubble can become, but at the moment the goal is $1 billion marketplace revenue which could significantly increase the company’s margins and share price.
Out of Redbubble and Altium, I think I’d rather buy Redbubble shares right now because of its ongoing strength and rising margins.
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