There’s no stopping the bulls! The ASX surged to a two-and-a-half month high in after lunch trade despite brewing geopolitical tensions threatening to overtake the COVID-19 pandemic as a major source of contention.

The S&P/ASX 200 Index (Index:^AXJO) jumped 2.4% to 5,753 at the time of writing. If it finishes at this level, it would mark it highest close since March 10.

Warnings of overstretched valuations and trade protectionism between China and the US and its allies can’t stop our market from entering into bull territory.

If you missed the big 25% bounce from the bear market low in March, it might not be too late to join the party as brokers have only just upgraded these ASX shares to “buy”.

Turning point

The first is Smartgroup Corporation Ltd (ASX: SIQ). Shares in the novated leasing group jumped 9.3% to $6.40 at the time of writing after Morgans upgraded the stock to “add” from “hold”.

Positive news from industry peer Eclipx Group Ltd (ASX: ECX) and anecdotal signs of a recovery in the automotive sector gave the broker enough reason to lift its recommendation on Smartgroup.

“The clearest data point has been from ECX, which recently reported novated lease orders (as at mid-May) were down ~35% on pre-Covid levels, having recovered from down ~60% in April,” said Morgans.

“Historically, SIQ’s novated volumes have been less volatile given a higher skew to Government and Health sectors.

“In addition, ECX has shown a very strong week to week recovery in its fleet end of lease car sales (recovered to within 4% of pre-Covid levels).”

The broker’s price target on Smartgroup is $6.95 a share.

Dropping into the “buy” zone

Another stock racing higher today is the Insurance Australia Group Ltd (ASX: IAG) share price. Shares in the insurer jumped 3.2% to $5.80 as IAG became the latest stock to be added to Credit Suisse’s buy list.

The broker upgraded its rating on IAG to “outperform” from “neutral” after its shares lagged the market by around 14% over the past two months.

The sell-off could be overdone. Not only are the earnings risk priced into the stock, but increases on insurance premiums and very low (sometimes negative) bond yields could trigger a rebound.

“We previously considered IAG a defensive stock in the current environment but struggled with valuation,” said the broker.

“Post a recent share price pullback and the stock trading at a 10% PE discount to the market, from 0-20% premium in recent years, we now consider IAG at an attractive entry price.”

Credit Suisse’s price target on IAG is $6.40 a share.

More reading

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• Leading brokers name 3 ASX 200 shares to sell today
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
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Motley Fool contributor Brendon Lau 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.

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It is another positive trading day for the S&P/ASX 200 Index (ASX: XJO), up by 1.8% at the time of writing. This follows yesterday’s strong share price gains across the board.

Australia’s technology sector performed particularly strongly with few tech shares in the red today. This is likely driven by hopes the Australian economy can return to normal quicker than anticipated.

Here we examine three ASX tech shares which have performed particularly strongly so far today: Bigtincan Holdings Ltd (ASX: BTH), Audinate Group Limited (ASX: AD8) and Wisr Ltd (ASX: WZR).

Bigtincan

Bigtincan operates in the fast-growing sales enablement niche within the IT software market. Bigtincan provides organisations and their sales teams with a platform to access and collaborate on content and improve customer engagement.

It also leverages artificial intelligence through features which enable users to personalise and recommend content. Its core offering is accessible to users on a range of desktop and mobile platforms through devices like iPads.

Bigtincan’s was caught up in the wider market selloff on the ASX over the past few months, triggered by the coronavirus crisis. Its share price declined from $1.02 in mid – February to $0.265 in mid – March, a massive 73% decline. Since then, its share price has recovered a large part of that loss and is up another 6% today to currently trade at $0.795.

Audinate

Audinate’s uses its audio networking solutions in the production of a range of professional audio equipment. Its core networking solutions improve audio quality using ethernet or fibre optic cables. This ultimately reduces the need for extra cabling and installation.

A recent market update showed that Audinate believes it is in a relatively strong position to navigate through current economic challenges. This is supported by a very healthy $30.9 million cash on hand and is underpinned by a strong balance sheet. This shows the ability to deliver solid revenue growth in the March quarter.

Like Bigtincan, Audinate has seen a strong bounce back in its share price since mid-March. This rally in its share price continued further today with a strong 10.6% gain at the time of writing.

Wisr

Online fintech lender, Wisr has also seen a rally in its share price since mid-March. Wisr is up another 8% today, although its market rally is not as strong as either Bigtincan’s or Audinate’s. Its current share price of $0.162 is still 49% below its February high of $0.315.

Wisr’s loans are used for a range of purposes such as debt consolidation, buying a vehicle, home renovations, wedding and travel. With discretionary spending dramatically reduced during the coronavirus, it’s not surprising its share price has been hit hard in recent months. However, renewed optimism in the Australian economy has helped to drive its share price higher today.

More reading

• 3 stellar ASX tech shares to buy and hold for decades
• Got $10,000 to invest? I would buy these ASX shares right now
• Why Aristocrat Leisure, Bigtincan, Clover, & Megaport shares are dropping lower
• 3 small cap ASX tech shares that could be stars of the future
• These small cap ASX shares could be stars of the future

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and BIGTINCAN 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 Why these 3 exciting ASX tech shares are surging higher today appeared first on Motley Fool Australia.

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ASX 200 tech shares have offered great returns to shareholders over recent years. This comes as the marketplace moves from brick-and-mortar businesses to online, and more and more people are using technology in almost every area of life. Technology companies are often known for their ability to deliver huge earnings growth, something that companies in other sectors cannot always provide.

While the S&P/ASX 200 Index (ASX: XJO) is down 19.69% from highs reached in February, the S&P/ASX Information Technology Index (ASX: XIJ) is down just 5.67% in the same period. The newcomer, S&P/ASX All Technology Index (ASX: XTX), is down 2.17% since it launched in late February. This reflects the positive market sentiment towards technology companies and their ability to continue their growth during difficult economic times.

Technology companies often rely on changing consumer trends to drive their growth. Frequently, as a technology gains traction it has a rapid uptake by consumers and can quickly achieve huge market penetration. These technology shares have proven their capabilities and made it into the index of Australia’s biggest 200 companies. They also offer great value to shareholders.

Afterpay Ltd (ASX: APT)

Afterpay is a financial technology company offering payment solutions to consumers. It operates in the United States, the UK, Australia and New Zealand. Afterpay recently hit new highs as it announced that it had reached 5 million US customers, a proud boast for any Australian company. This takes the total customers signed onto Afterpay’s platform to nearly 9 million worldwide. The company has an average transaction value of $150. This suggests that there is plenty of room for Afterpay to derive profits from transactions. Its net margin from payments sits at around 2.1% (this is the amount Afterpay derives from its transactions after paying the costs of those transactions).

While Afterpay is currently turning a loss, this is not abnormal for a technology company in its growth phase. Currently, customer growth is soaring. For the first half of financial year 2020, customer growth was up 134% compared to the first half of 2019. Underlying sales were up a massive 109%.

In Q3 of the 2020 financial year, however, Afterpay processed $2.4 billion in sales for merchants. This was a massive 354% increase over the same period in 2019. Its payment platform is now offered or in the process of being offered by more than 15,000 brands and retailers. If Afterpay can continue to grow at this rate, it will soon be a well-established international market leader in consumer financing.

Altium Limited (ASX: ALU)

Altium is a software company that provides solutions for engineers in circuit board design. Demand for Altium’s cloud-based design software is growing rapidly. The company boasts that its software allows engineers to work from anywhere and connect to anyone.

Altium is fast becoming a market leader in engineering software and has a solid balance sheet with healthy cashflow. The company previously announced that it expects earnings of around US$200 million in financial year 2020. It has since stated that weakness in the final quarter of the financial year will partly reduce expectations.

Altium also announced that it is moving toward high volume online sales, which will support revenue. It is also offering lower pricing and extended payment terms to customers during the current economic downturn. The company aims to attract 100,000 subscribers by 2025, which will provide revenue of an estimated US$500 million. In FY19, revenue was US$171.8 million and the company paid a dividend of 34 Australian cents.

Xero Limited (ASX: XRO)         

Xero is a New Zealand-based software company listed on the ASX. It provides cloud computing accounting software for small to medium size businesses. As at 31 March 2020, the company had 2.285 million subscribers with a life time value of $2,422 per subscriber. This equates to a total of $5.53 billion for current subscribers. Additionally, the company’s subscriber base is growing quickly with an increase of 467,000 during the 2020 financial year. Xero is working hard to increase the revenue earned from customers. In the 2020 financial year, it saw a 27% increase in the lifetime value of subscribers.

The company earns a gross margin of 85.2% from customers. This means that a massive 85.2% of the company’s revenue forms its gross profit. In the 2020 financial year, Xero then invested a significant amount in marketing, product development and paid administration expenses. It earned a net profit after tax of $3.3 million. This was the first time the company posted a full year net profit and reflects the growth of the company.

These numbers are just the beginning, with Xero boasting in its annual report that it has the opportunity to reach the entire global small business community.

More reading

• 3 timeless investing lessons from 2020 (so far!)
• Up over 100% in 2 months. Are Nearmap shares still a buy at current prices?
• How to pick better shares and earn better returns
• 4 reasons the Afterpay share price just hit $50
• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. 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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