‘High quality’: Fund names 2 obscure ASX tech shares to buy now

What a difference a year makes.

Twelve months ago, technology shares were riding high, bathing in all the love from the market. It’s the future! How can you go wrong?

But now the S&P/ASX All Technology Index (ASX: XTX) has crashed 36% year to date and high-growth tech stocks have been abandoned like a sinking ship.

But does this mean there are some bargains to be nabbed?

Here are two ASX shares that Celeste Funds Management reckon are ripe for investing at the moment:

‘Ballast in the portfolio’ during uncertain times

As a services provider, Data#3 Limited (ASX: DTL) is rarely mentioned among the more glamorous tech stocks.

But for the Celeste team, it’s a reliable investment in tough times for the market and the economy.

“Data #3 [shares] rose 3.5% over the month of September in what was one of the most challenging months in ASX history,” its memo to clients read.

“While there were no new announcements of note in September, the strong August result saw Data #3 deliver sales of $2,193 million (+12.2% vs pcp) and NPAT of $30 million (+19.1% vs pcp).”

While most tech shares plunged, the Data #3 share price has actually risen 4.6% so far this year.

The business has a $6 million backlog of work and showed “no signs of weakening demand”, which investors loved during a time of great economic anxiety.

“Looking ahead, while cognisant on valuation, we remain positively disposed to Data #3 as it is a high-quality business with a strong balance sheet that should provide ballast in the portfolio during a period of economic volatility.”

‘Well placed to grow’ 

Infomedia Limited (ASX: IFM) is another name not often seen among the higher-profile tech stocks. The business provides software for the automotive parts supply and service industry.

The share price took a significant hit last month.

“Infomedia declined by 16.4% over the month after the company closed the data room to several prospective private equity bidders post 15 weeks of due diligence.”

The Celeste team backed the company’s rejection of the acquisition proposal.

“This bid was typical of recent form of most private equity bids in Australia which have amounted to little more than time-wasting fishing trips.”

The analysts retain full faith in Infomedia’s long-term prospects.

“Infomedia has solid software, solves a problem for the corporate user, and remains well placed to grow under the new CEO,” read the memo.

“We expect targeted investment in sales and marketing over the next 12 months will boost execution capability in the USA and Europe.”

Infomedia shares have dropped 21.9% since the start of the year, but it does pay out a 4.7% dividend yield.

The post ‘High quality’: Fund names 2 obscure ASX tech shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Infomedia. The Motley Fool Australia has recommended Infomedia. 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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