If you’re looking to take advantage of recent weakness in the tech sector then the two ASX tech shares listed below might be the ones to consider.
Here’s why they are rated as buys:
Appen Ltd (ASX: APX)
Appen has a global team of over a million crowd-sourced experts that prepare the data that goes into artificial intelligence (AI) and machine learning models. It has worked with tech giants such as Microsoft, Facebook, Google, and Apple. In respect to the latter, Appen played a role in the development of its virtual assistant, Siri.
The good news is that AI is still at a relatively early stage and the market is expected to grow strongly in the future. At its half year results, management noted that AI spending is growing at 28% and could accelerate as AI adoption increases in a post-crisis environment. This is particularly the case in the government sector, with AI budgets increasing rapidly into the billions.
Analysts at UBS are confident in Appen’s long term growth prospects. Following its half year update, the broker slapped an outperform rating and $44.00 price target on its shares.
ELMO Software Ltd (ASX: ELO)
ELMO is a cloud-based human resources and payroll software company. It provides businesses with the ability to streamline a wide range of processes through a single unified platform.
ELMO has been growing at a strong rate over the last few years and has continued this positive form in FY 2021. This is being driven by the rapid adoption of cloud-based solutions, the quality of its platform, and its growth through acquisition strategy. The latter saw the company recently announce the acquisition of UK-based Breathe. This gives the company access to the SME market and plenty of cross-selling opportunities in the $6.8 billion UK market.
Analysts at Morgan Stanley responded to the news by reaffirming their overweight rating and lifting the price target on ELMO’s shares to $9.30. This compares to the current ELMO share price of $6.42.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- 3 fantastic ASX shares to buy next week
- Why are ASX tech shares all over the place today?
- 2 ASX tech shares growing strongly in 2020
- Why the CBA (ASX:CBA) share price and these ASX stocks could get a $100bn boost
- Here are 2 rapidly growing ASX growth shares
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 and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia has recommended Elmo Software. 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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