There are some quality ASX tech shares that Aussies can buy for their portfolios. I believe they could be buys today for the next decade.
Technology businesses are very attractive because they generally have higher gross profit margins than businesses that deal with physical products:
Altium Limited (ASX: ALU)
Altium could be one of the highest-quality ASX tech shares, or it used to be before COVID-19.
It sells electronic design software to a wide range of clients around the world such as Tesla, Space X, Cochlear Limited (ASX: COH), ResMed Inc (ASX: RMD), CSIRO, Microsoft and Apple.
Altium is currently going through tough times because of the pandemic’s impacts. In the last quarter of FY20 and first quarter of FY21, Altium lowered prices to attract more customers to its products.
It has also decided to sell the TASKING business. Whilst this wasn’t a key division, it will lower earnings in future periods with its exclusion.
However, I believe that this will end up being a shorter-term issue for the ASX tech share. I think as the global economy rebounds and recovers from COVID-19, it will mean Altium’s earnings and demand increase. Margins in-particular could rise from where they are right now in FY21.
Altium is looking to become the dominant provider of the electronic PCB software space this decade. I think it will regain investor confidence. It looks like pretty good value at a share price of around $26.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is one of the leading ASX medical tech shares in my opinion.
It’s involved in the breast screening of more than a quarter of US women. Hopefully its offering can lead to even better analysis and detection of early breastfeeding cancer.
There are a number of attractions about Volpara.
It has a defensive source of revenue – healthcare is one of those things that people are likely to keep spending money on even during difficult times.
Volpara is steadily increasing its market share both organically and inorganically. It recently acquired CRA Health, an industry leader in breast cancer risk assessment. CRA Health has a market share of around 6% of US breast screenings and it’s integrated with the major electronic health record and genetics companies.
The ASX healthcare share has a steadily growing average revenue per user (ARPU), in its third quarter of FY21 the ARPU went up 5% to US$1.22. CRA Health has ARPU of US$1.70. This is very useful for a business that has gross profit margins of around 90%.
With such a strong offering for clients, Volpara has a bright future ahead if its market share can climb further and it can cross-sell more of its products to existing clients and win new clients.
