On Saturday I looked at the healthcare sector and revealed how it has vastly outperformed the S&P/ASX 200 Index (ASX: XJO) over the last five years.

It isn’t the only side of the market to have outperformed the index over the period. Another area which has been on fire has been the tech sector.

During this time the S&P/ASX 200 Information Technology index has gained a sizeable 84.6%.

But don’t worry if you missed these gains, because I believe the sector can continue to outperform over the next five years.

But which shares should you buy? I believe the three ASX tech shares listed below have the potential to generate market beating returns for investors. Here’s why:

Afterpay Ltd (ASX: APT)

I think this payments company is an ASX tech share to buy with a long term view. Although its shares have been on fire this year, I still believe they can go materially higher in the future. This is due to the growing popularity of buy now pay later with consumers and retailers, its US$5 trillion opportunity in the United States, and expansion opportunities in mainland Europe and Asia. The latter could be supported by US$500 billion WeChat owner, Tencent Holdings. It recently became a substantial shareholder of Afterpay.

Altium Limited (ASX: ALU)

Another ASX tech share to consider buying is Altium. It is a printed circuit board design software company which is benefiting greatly from the rapidly growing Internet of Things (IoT) market. The explosion of connected devices globally has been driving increasing demand for its Altium Designer software. So much so, this year Altium expects to achieve 50,000 subscribers. After which, it is aiming for 100,000 subscribers by FY 2025. Together with its other promising businesses such as NEXUS and Octopart, I feel Altium is well-placed to deliver strong long term earnings growth.

Appen Ltd (ASX: APX)

I final ASX tech share to look at is Appen. The artificial intelligence (AI) company has a million-plus team of crowd-sourced experts which prepare the data to go into the AI and machine learning models of some of the world’s largest tech companies. This includes the likes of Facebook, Microsoft, and Apple. In respect to Apple, Appen helped the tech behemoth develop its intelligent assistant, Siri. The good news is that AI is growing in importance for businesses. I believe this means demand for its services will continue to grow over the next decade and underpin strong earnings growth.

More reading

• How to earn $50,000 in dividends each year with ASX shares
• How I would build a balanced portfolio worth $100,000 with 10 ASX shares
• Here’s how you invest in super to get a free $500
• 3 ASX shares I’d buy if the market hits 23 March levels again
• ASX 200 falls 1.9%, big 4 ASX banks retreat

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 AFTERPAY T FPO and Altium. The Motley Fool Australia owns shares of Appen Ltd. 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 The most explosive ASX tech shares you can buy today appeared first on Motley Fool Australia.

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The Healius Ltd (ASX: HLS) share price will be in the spotlight tomorrow morning on reports that it sealed a $500 million deal on the weekend.

The medical facilities operator agreed to sell its 70-odd medical centres to Australian private equity firm BGH Capital, reported the Australian Financial Review.

The agreement, which is understood to be binding and fully funded, will make BGH the largest operator of general practice clinics in the country.

Takeover defense

These medical centres generated $183 million in revenue and $30 in earnings before interest, tax, depreciation and amortisation (EBITDA) in the six months to end December 2019, according to the AFR.

The divestment is seen as a defensive strategy to impede the takeover of Healius by Partners Group, which offered $3.40 a share for all of the company back in February.

Healius rejected the non-binding offer and it’s been a one-way street for its share price since as it slumped to $2.53 on Friday.

Can Healius shares outperform?

Management will be hoping for a big boost in the stock to justify the snub to shareholders. While it remains to be seen how the stock trades on Monday morning, history is on its side.

ASX stocks that undertake a divestment tend to outperform and recent transactions, such as Wesfarmers Ltd (ASX: WES) cutting the apron strings of Coles Group Ltd (ASX: COL), could put Healius shareholders in a good mood.

Healthcare sector underperformer

That would be a refreshing change as there isn’t much goodwill floating about for Healius. The stock crashed 20% over the past year when its peers have been faring a lot better.

The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price gained around 2% while the Sonic Healthcare Limited (ASX: SHL) share price dipped 8% over the same period.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) lost 11% of its value, no thanks to the COVID-19 global market meltdown.

Foolish takeaway

I can’t help feeling that BGH got a better deal than Healius, assuming the centres are being acquired on a 10 times EBITDA multiple.

While that’s within a reasonable range for acquisitions, some might argue that defensive assets in this ultra-low interest rate environment would be worth more.

Healius is likely to use the proceeds from the asset sale to repay debt and to focus its resources on growing its pathology and diagnostic imaging business.

The group had been trying to sell its medical centres since the start of the year before the coronavirus pandemic scared off some potential bidders.

It may not be a big surprise that BGH emerged as the victor given that it raised a lot of capital in 2018 for its takeover fund and it already holds medical facilities in its portfolio.

The acquisitive firm also owns now-delisted educational services group Navitas Limited (ASX: NVT) and is reported to be in talks with Village Roadshow Ltd (ASX: VRL) to acquire its theme parks.

More reading

• 3 strong ASX dividend shares to buy next week
• Cheap ASX 200 shares I’d buy for less than $10
• Why we may be in danger of another coronavirus ASX market crash
• These were the best performing shares on the ASX 200 last week
• Why the Nearmap share price and one other are on my buy list

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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 the Healius share price will be in the spotlight tomorrow morning appeared first on Motley Fool Australia.

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