On Saturday I looked at the healthcare sector and revealed how it has vastly outperformed the S&P/ASX 200 Index (ASX: XJO) over the last five years.
It isn’t the only side of the market to have outperformed the index over the period. Another area which has been on fire has been the tech sector.
During this time the S&P/ASX 200 Information Technology index has gained a sizeable 84.6%.
But don’t worry if you missed these gains, because I believe the sector can continue to outperform over the next five years.
But which shares should you buy? I believe the three ASX tech shares listed below have the potential to generate market beating returns for investors. Here’s why:
Afterpay Ltd (ASX: APT)
I think this payments company is an ASX tech share to buy with a long term view. Although its shares have been on fire this year, I still believe they can go materially higher in the future. This is due to the growing popularity of buy now pay later with consumers and retailers, its US$5 trillion opportunity in the United States, and expansion opportunities in mainland Europe and Asia. The latter could be supported by US$500 billion WeChat owner, Tencent Holdings. It recently became a substantial shareholder of Afterpay.
Altium Limited (ASX: ALU)
Another ASX tech share to consider buying is Altium. It is a printed circuit board design software company which is benefiting greatly from the rapidly growing Internet of Things (IoT) market. The explosion of connected devices globally has been driving increasing demand for its Altium Designer software. So much so, this year Altium expects to achieve 50,000 subscribers. After which, it is aiming for 100,000 subscribers by FY 2025. Together with its other promising businesses such as NEXUS and Octopart, I feel Altium is well-placed to deliver strong long term earnings growth.
Appen Ltd (ASX: APX)
I final ASX tech share to look at is Appen. The artificial intelligence (AI) company has a million-plus team of crowd-sourced experts which prepare the data to go into the AI and machine learning models of some of the world’s largest tech companies. This includes the likes of Facebook, Microsoft, and Apple. In respect to Apple, Appen helped the tech behemoth develop its intelligent assistant, Siri. The good news is that AI is growing in importance for businesses. I believe this means demand for its services will continue to grow over the next decade and underpin strong earnings growth.
And here are more exciting shares which could be destined for big things…
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- How to earn $50,000 in dividends each year with ASX shares
- How I would build a balanced portfolio worth $100,000 with 10 ASX shares
- Here’s how you invest in super to get a free $500
- 3 ASX shares I’d buy if the market hits 23 March levels again
- ASX 200 falls 1.9%, big 4 ASX banks retreat
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Altium. The Motley Fool Australia owns shares of Appen 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.
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