ASX tech shares seem to be all the rage right now. The Nextdc Ltd (ASX: NXT) share price has been surging higher in 2020 to lead the S&P/ASX 200 Index (ASX: XJO) outperformers.
But it’s not just the Aussie data centre operator that I’ve got my eye on. I like a few of the top ASX tech shares right now but the key is to find those that are still good value.
Here are a few of my top picks that I like even at their current prices.
Nextdc and 2 other ASX tech shares to buy
I really like ASX tech shares with a strong underlying story. For Nextdc, I think that’s the spectacular growth in demand for off-site data storage and security.
Australia is transitioning towards a semi-permanent work from home setup. That means more companies are going to look to use data centres as a core part of their business operations.
Nextdc is an incumbent in the industry and is well-placed for future growth. The company already provides connectivity and data centre services alongside technical support.
With the growth of cloud connectivity and collaboration tools, I think the ASX tech share may continue to climb in 2021.
Nextdc aside, I like the look of Xero Limited (ASX: XRO).
The Xero share price has jumped 15.3% higher this year and isn’t far off its all-time high.
Google Finance suggests the ASX tech share currently trades at a price-to-earnings (P/E) ratio of 4,309.9. We won’t get to see the Kiwi accounting software group’s earnings until November.
That means it’s something of a gamble but I wouldn’t consider Xero a relative value play. Xero to me has long-term potential to transform the business world with simple accounting.
I think strong customer retention and acquisition is the key here. If Xero can continue to land big clients and deliver strong earnings, it could crack the $100 per share barrier.
Finally, Altium Limited (ASX: ALU) is on my watchlist after its full-year earnings result yesterday.
Altium reported strong revenue growth of 10% to $189 million and continues to be a printed circuit board software leader.
The ASX tech share increased its subscriber base by 17% and posted a record earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 40%.
I think this strong growth profile underpins the future potential of the Altium share price despite its lofty valuation.
Foolish takeaway
These are just a few of the ASX tech shares that I like at their current prices.
I’m sure we’ll see more volatility in the years ahead, but I think a solid underlying business is the key to long-term success.
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Ken Hall 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 Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. 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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