2 ASX tech shares to keenly watch in 2022

As COVID-19 Omicron and inflation fears drove investors away from growth stocks in recent weeks, technology shares have suffered.

The S&P/ASX All Technology Index (ASX: XTX) is down more than 4.7% in the past month, even though a rise in interest rates actually hasn’t happened yet.

But for many of these tech shares, the underlying businesses haven’t fundamentally changed, nor their future potential.

As such, let’s take a look at 2 ASX tech shares that Medallion Financial managing director Michael Wayne thinks are up for a big 2022:

Pricing power and large overseas market

Raiz Invest Ltd (ASX: RZI) is a micro-investment app that’s seen its shares rise 76% this year, although it did most of the heavy lifting before March.

Wayne reckons this fintech is one to watch next year.

“As we enter 2022, one business that we think is well-positioned to prosper even in the event of an inflationary environment is a company called Raiz,” he posted on Livewire.

“We believe the potential impact of rising inflation on the business is unlikely to have much of a direct impact on customer willingness to invest.”

According to Wayne, the business has shown an ability to increase prices to increase its revenue, rather than purely relying on attracting new clients.

“Over the years, the company has been able to steadily implement platform fee increases from $1.25 per month to $2.50 per month and now $3.50 per month — levels of growth that far exceed the minor growth experienced in customer acquisition costs.”

Raiz is also expanding into south-east Asia, where the market is even more primed as a “first-mover” for mobile-based investment solutions.

“Indonesia has a very large official population of 277 million, of which approximately 55 million are considered to be target customers for Raiz,” said Wayne.

“Aside from being a large potential customer base, the target population is smartphone savvy with each Indonesian having to an extent skipped the personal computer era and said to own on average 4 mobile phones per person.”

Raiz shares closed Friday at $1.74, up 2.35% for the day.

‘A compelling investment opportunity’

Longtime ASX darling Seek Limited (ASX: SEK) has continued on its merry way in 2021, gaining in excess of 20% during the year.

The job-hunting website hasn’t fared too badly even during the tech rout in the past month, with the stock price actually pushing up 3.14%.

Wayne’s team still likes the look of Seek in their portfolio.

“We remain positive on Seek as the apparent earnings implications resulting from years of product and early-stage venture investments are starting to be realised,” Wayne told Money magazine.

“With a footprint spanning the globe, solid management team, high demand for skilled employees, and a pipeline of new opportunities offering differentiating characteristics, we believe Seek presents as a compelling investment opportunity within the current market.”

It’s not necessarily a consensus pick among other professionals though.

According to CMC Markets, 5 out of 10 analysts rate Seek as a “hold” while 4 think it’s a “strong buy”.

Seek shares closed Friday at $35.22.

The post 2 ASX tech shares to keenly watch in 2022 appeared first on The Motley Fool Australia.

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• Raiz (ASX:RZI) share price climbs 8% as Seven West Media makes strategic investment
• Top brokers name 3 ASX shares to sell today
• SEEK (ASX:SEK) share price falls despite FY 2022 guidance update
• Why Chalice Mining, CBA, Nufarm, and SEEK shares are sinking

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK 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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