Technology stocks have been hit especially hard in the past couple of months as fears of rising interest rates paralyse the market.
The S&P/ASX All Technology Index (ASX: XTX) has lost more than 23% since November, with pretty much all the ASX shares in that sector getting a haircut.
So it can be confusing to know which tech stocks are worth retaining the faith in and which ones might be struggling for a while yet.
The team at Firetrail this month reported to its clients 2 tech shares that have been an absolute drag on its fund’s performance.
But they’re sticking with them for the long haul:
We bought more of this ASX share that fell 40%
Megaport Ltd (ASX: MP1) shares have plummeted almost 40% since mid-November.
Just in January, the stock fell a painful 28%, dragging down the rest of the Firetrail Small Companies Fund.
“During the month Megaport released its quarterly result to the market. Whilst headline numbers were in-line, we were disappointed by the number of Megaport Virtual Edge (MVE) sales,” read the memo from Firetrail analysts.
“Megaport reported 12 sales during the quarter relative to our expectations of 30.”
However, Firetrail has long-term faith in the virtual network provider and actually bought up more shares during this price weakness.
“Megaport remains a high conviction position and we increased our holdings during the month.”
Many other analysts agree with Firetrail, with 8 of 12 saying on CMC Markets that Megaport shares are a “strong buy”.
This tech company has halved its value
Nitro Software Ltd (ASX: NTO) shares have had an even worse time than Megaport, falling a stress-inducing 53% since November.
The software firm saw its stock price fall 25% just in the month of January.
“During the month the company reported an inline quarterly result and completed the acquisition of e-signature business, Connective,” stated the Firetrail team.
But similar to Megaport, the Firetrail Small Companies Fund is sticking with the document productivity software provider.
“Despite the weak share price performance following the acquisition, our recent due diligence has increased our conviction in the quality of the Connective business.”
It’s almost a consensus view among other analysts, with 7 out of 8 rating Nitro shares as a “strong buy”, according to CMC Markets. The 8th analyst says the stock is a “moderate buy”.
The post 2 ASX tech shares we’re backing through the turmoil: analysts appeared first on The Motley Fool Australia.
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Motley Fool contributor Tony Yoo owns MEGAPORT FPO and Nitro Software Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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