As a growth investor, tech stocks are at the top of my watchlist. Of those, Webjet Limited (ASX: WEB) has easily been a favourite, along with Appen Ltd (ASX: APX) and Xero Limited (ASX: XRO).
If you had invested in these ASX tech companies in early January, you would have multiplied your wealth significantly.
• Webjet: 55% increase YTD for a $16.42 close yesterday.
• Appen: 90% increase YTD for a $24.31 close yesterday.
• Xero: 28% increase YTD for a $53.52 close yesterday.
Webjet is both a B2C and B2B digital travel agency. It enables users to compare and combine flights, accommodation, packaged holiday deals, insurance and hire cars domestically and internationally.
It’s Webjet’s B2B platform, WebBeds, that has attracted considerable growth this year. WebBeds’ EBITDA grew 135.2% to $30.1 million in just 6 months to December 2018. Webjet itself amassed a whopping 42% growth in EBITDA to $58 million to secure the second largest market share in the B2B travel industry.
These stellar results were in part driven by Webjet’s acquisitions of JacTravel, which wholesales hotel rooms and group tours, and Destinations of the World, a B2B accommodation wholesaler.
While Webjet is unlikely to return another 50% in the next 5 months, I’m a firm believer in its digital strategy and aggressive growth tactics in the B2B travel space.
Appen has built a crowdsourced labour pool of remote workers who create data sets for clients. This is used as input for training machines with applications ranging from image recognition software to search tools. The company claims to have 1 million people who work for them from the comfort of their homes. Appen’s customers include Microsoft, Google and Spotify.
Appen’s most recent results show an annual growth rate of 25% based on its $42 million FY earnings. Analysts expect that its final forecast will reach $86 million by 2022. Currently, EPS sits at $0.39, and this is expected to almost double to $0.70 in just 3 years.
This could be a quality long-term tech stock that could be an outlier in your portfolio.
Xero offers a cloud-based accounting software-as-a-service for small and medium-sized businesses. It’s a robust accounting solution with intricate accounting features, detailed reports, unlimited users and has a connected app functions which allows for over 700+ integrations across companies like Stripe, PayPal and Deputy. The company has over 1.5 million subscribers and services 16,000 businesses internationally.
Xero is the leader in cloud accounting across Australia, New Zealand and the UK. It has growth 62% year-on-year in North America, making headwinds in Hong Kong, Singapore and even South Africa. This will definitely be a point to take note of in Xero’s FY results.
Based on 2020 earnings, Xero is expected to be trading on a 177x multiple, far ahead of its WAAAX peers. This means that investors are willing to dish out a lot of capital to buy into Xero’s profits and its attractive 83% gross margin. Given strong penetration across global markets, this company is poised for growth.
If you’re interested in growth verticals but these stocks aren’t for you, perhaps you should check out this lesser known ASX company.
A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming. To the tune of an estimated $US22 billion.
Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.
Here's the best part: we think there's one ASX stock that's uniquely positioned to profit immensely from this explosive new industry... taking savvy investors along for what could be one heck of a ride.
AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.
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Motley Fool contributor Audrey Thehamihardja has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and Xero. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019