The ASX tech sector is relatively small compared to the much larger US NASDAQ tech sector. However, it is home to a growing number of exciting tech shares, including Megaport Ltd (ASX: MP1).

You may be familiar with names such as Appen Ltd (ASX: APX), Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), but perhaps not Megaport.

Here’s why I think this fast-growing tech share is a good buy and hold option for the long term.

What does Megaport do?

Megaport provides a ‘network as a service’ offering to enterprises, or what is commonly referred to as “elastic interconnection services”.

This enables enterprises to increase or decrease their fixed broadband bandwidth. They can do this in response to their own usage requirements and can then ramp up their bandwidth requirements during busy times. Likewise, they can reduce it when demand is lower.

The service is provided via a network of cloud providers, data centre operators, and network service providers.

A simple mobile application enables users to access services for as short or as long a period as they require.

Why is the Megaport business model so compelling?

Megaport has a subscription-based billing model.

This is much more beneficial than being tied to regular network service agreement levels, or expensive long-term contracts.

It also provides Megaport with a sticky recurring revenue stream, receiving revenue from not just the network access points, but also the services that customers consume within the ecosystem.

As more network access points are added, more customers are attracted to joining. Also, existing ones tend to consume more. Thus, the ecosystem continues to grow and grow over time.

Megaport has a geographically dispersed customer base across the Asia Pacific, Europe and North America. This provides it with a diversified income stream.

It also partners with all the leading cloud operators including Amazon Web Services, Google Cloud and Microsoft Azure, further strengthening its business model as none are in direct competition.

Strong customer demand in a fast-growing industry

Megaport is growing rapidly within a fast-growing industry. Demand for its services continues to grow strongly.

It is connected to over 60 data centres globally. And this number continues to climb. The amount that enterprises worldwide continue to spend on cloud computing services is increasing at a rapid clip.

This is leading to solid customer and revenue growth, shown through Megaport’s share price.

In the first half of FY 2020, Megaport reported a massive 70% increase in revenue to $25.9 million.

Its March 2020 quarter update revealed a 10% increase in revenue, quarter on quarter. At the end of March, it had a healthy cash balance of $108.7 million.

Are Megaport shares a good long-term investment?

Buying Megaport shares is potentially a risky investment. Its revenues are growing rapidly and it is still yet to reach profitability.

Also, its current share price is factoring in the expectation that it will continue to grow at a high growth rate. If it fails to meet its growth targets, its share price could be hit harshly over the short term.

However, I still believe Megaport is a good long-term investment. This is despite the possibility of short-term share price volatility.  

Megaport is well placed to tap into the rapid rise of cloud computing and the need for rapid connectivity. The global public cloud services market continues to expand rapidly, as more infrastructure migrates to the cloud.

More reading

• 3 top ETFs you can easily diversify your portfolio with immediately
• 3 large cap shares beating the ASX 200 this year
• Where to invest $2,000 in cheap shares
• Why the shares of Afterpay rival Openpay are up 840% since March
• Should the Xero share price have a P/E ratio of 4,000?

Phil Harpur owns shares of AFTERPAY T FPO, Appen Ltd, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, MEGAPORT FPO, and Xero. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended MEGAPORT FPO. 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.

The post Are Megaport shares the ones to buy and hold beyond 2030? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gT3np2

The S&P/ASX 50 index is potentially Australia’s most important large-cap equity index.

It represents 50 of the largest and most liquid ASX shares by float-adjusted market capitalisation.

Whilst this doesn’t necessarily mean that all the shares on the index are buys, I believe there are a few that standout as strong buys.

Three outstanding ASX 50 shares I would buy today are listed below:

CSL Limited (ASX: CSL)

The first ASX 50 share to look at buying is biotherapeutics giant CSL. I think it is one of the best buy and hold options on the index due to its high quality operations. Both its CSL Behring and Seqirus businesses appear well-placed to deliver strong sales and earnings growth over the next decade. This is thanks to their leading products and lucrative research and development (R&D) pipelines. In FY 2019 CSL invested US$832 million in its R&D activities and a similar level of investment is expected this year. I believe these investments will allow the company to maintain its market-leading position and underpin solid profit growth for the foreseeable future.

Goodman Group (ASX: GMG)

I think Goodman Group is another ASX 50 share to buy. It is an integrated commercial and industrial property group which owns, develops, and manages industrial real estate globally. The company’s portfolio has been expertly curated over the last few years to give Goodman exposure to online, logistics, food, consumer goods, and digital economy. I’m particularly positive on its prospects due to its exposure to the rapidly growing ecommerce market. Especially given its relationships with the likes of Amazon and DHL. Overall, I believe Goodman is well-placed to deliver solid earnings and distribution growth over the next decade.

Telstra Corporation Ltd (ASX: TLS)

A final ASX 50 share to consider buying is Telstra. I’ve been very impressed with the progress the telco giant is making with its new strategy. This strategy is stripping out costs and simplifying its business. Combined with the easing of the NBN headwind and the arrival of 5G, I believe Telstra’s struggles are close to coming to an end. This could mean a return to growth is now in sight for the company. In light of this and its attractive valuation, I think now would be an opportune time to invest.

More reading

• 3 of the best ASX shares to buy with $3,000 right now
• These ASX 200 shares could be perfect for a retirement portfolio
• Top brokers name 3 ASX 200 shares to buy right now
• The smartest ASX 200 shares to buy with $2,500 today
• JobMaker is coming. These 3 ASX 200 shares could benefit

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.

The post Why I would buy these outstanding ASX 50 shares right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/30547l2

The Splitit Ltd (ASX: SPT) share price is racing higher today after the buy now, pay later (BNPL) provider released a trading update for the month of May.

At the time of writing, Splitit shares are sitting 20.15% higher for the day after rallying as much as 42.54% in early trade.

What did Splitit announce?

The BNPL small-cap reported record monthly merchant sales volume (MSV) of US$25.8 million in May, representing increases of 321% compared to May 2019 and 39% compared to April 2020. 

Breaking this down in terms of geography, MSV growth in North America and Europe jumped 336% and 548%, respectively, compared to May 2019. This has been supported by partnerships with global e-commerce retailers such as Purple, Nectar Sleep and Canyon Bicycles.

Splitit also announced a notable increase in total unique shoppers, with the number of shoppers successfully making a purchase using its platform surpassing 290,000 in May. The last 2 months alone have seen the addition of 45,000 new shoppers transacting through Splitit’s platform.

On the merchant front, Splitit now has 964 merchants offering its payment solution. This is up 12% from 862 at the end of March 2020.

Splitit’s average order value also improved in May, increasing to US$939 from US$737 in the first quarter of FY20 ending 31 March 2020.

On the whole, the company attributed these strong results to the onboarding of new large merchants in 2020, the growing shift to e-commerce, and customers increasingly using its payment solution to manage their cash flow.

Commenting on Splitit’s performance, CEO Brad Paterson said:

“We continue to see strong merchant demand as eCommerce expansion accelerates, while merchants are actively pursuing strategies to improve their conversion rates during and beyond the Coronavirus pandemic. Splitit is seeing growth in its share of checkout with merchants as it helps them meet changing consumer needs for greater flexibility and longer payment plans.”

More reading

• Should you ever buy into an ASX IPO?
• Why ASX payments shares might be the biggest winners of the 2020s

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. 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.

The post Why the Splitit share price rocketed 43% higher this morning appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Y0OGHU