I think there are a number of really good ASX tech shares that are worth owning for the 2020s.
Not every technology business is a buy in my opinion, some look overpriced and others may not be long term opportunities.
However, I’m excited by these ideas:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a digital donation business for the large and medium US church sector.
I really like it because of the recurring nature of church donations, the rapidly rising profit margins and the optionality of the business to expand geographically or into new sectors.
Pushpay also looks very good value in this low interest environment at 25 times the estimated earnings for the 2023 financial year, using CommSec’s forecast.
Kogan.com Ltd (ASX: KGN)
Kogan.com is an ASX tech share specialising in online retail and services.
The business is consistently growing its revenue, profit margins and bottom line for shareholders. I think it has powerful network effects. The bigger Kogan.com becomes, the better it can service each individual customer as it invests in its operations and expands its services.
I also think that the Kogan.com share price is very good value considering how quickly it’s growing. It’s priced at 18 times the 2023 estimated earnings according to CommSec.
Class Ltd (ASX: CL1)
Class is a software business that provides technology for SMSF cloud accounting, as well as new products such as Class Trust and Class Portfolio. It has also acquired other businesses to offer more services, and it can also cross-sell to those new customers.
The ASX tech share has a high retention rate and it has an attractive EBITDA margin too (EBITDA explained).
Redbubble Ltd (ASX: RBL)
Redbubble is one of the most promising ASX tech shares in the online retail space in my opinion. Artists can create designs, then Redbubble uses third party fulfillers to create the phone cases, t-shirts or whatever the customer has purchased.
If Redbubble can maintain and grow its market share over time, then I think it has a very promising future with its growing market share and rising profit margins. It also generates very good cashflow.
Altium Limited (ASX: ALU)
Altium is one of the world’s electronic PCB design software companies.
It’s suffering a bit at the moment due to COVID-19 impacts, but over the long term the company is planning to dominate the sector and this would have very strong benefits relating to the direction it can take the market and growing margins. The cloud product called Altium 365 is key for market share growth and monetisation.
Xero Limited (ASX: XRO)
Xero is building great customer loyalty from accountants and business owners alike. The cloud accounting software business is growing globally and has very attractive gross profit margins. It’s doing Amazon-like investing for growth, which is the right thing to do with how big the opportunity is. I think this ASX tech share is going to be very profitable in five or so years from now.
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
This exchange traded fund (ETF) gives investors exposure to the world’s video gaming industry. There are some really high quality businesses with high margins in this ETF’s holdings like NVIDIA, Tencent, Advanced Micro Devices, Activision Blizzard and Take-Two Interactive Software.
I believe that the sector has a long, profitable future ahead, which is why I’d be willing to invest into this ETF.
Summary thoughts
I really like all of these investments for the long term, they are some of my favourite ASX growth shares right now. At the current prices, I’d go for Pushpay, Kogan.com and the ESPO ETF as my three picks for this decade.
