ASX 200 tech shares could be the best way to grow your wealth over the coming years.

Technology businesses are able to grow much faster than normal businesses because their product is digital. You can “replicate” the product again and again for very little cost. It’s not the same as making, shipping and storing a table, food or anything else physical.

Here are three of the best ASX 200 tech shares for your watchlist:

Altium Limited (ASX: ALU)

Altium is a leading electronic PCB software business which provides software for engineers to design the devices and vehicles of the future. There’s going to be a lot more technology in our lives in the coming years and decades. Altium will play an important part in that.

The ASX 200 tech share has been one of the best performers over the past decade. It has been steadily growing its subscriber base, its profit margins and its cash balance.

It already has an impressive client list including Space X, NASA, Tesla, Google, Amazon, John Deere and many more.

Altium is aiming for market dominance with 100,000 Altium Designer subscribers by 2025. The long-term goal is more important than what goes on in 2020. Clients tend to stick with software once they’re using it. But shorter-term profit could be hampered by the coronavirus effects.

With everything that’s going on, I’m waiting for Altium’s share price to go under $30 before buying any more.

Xero Limited (ASX: XRO)

Xero is another top ASX 200 tech share. It provides users with very useful cloud accounting software. It has a lot of automation tools that are a big timesaver.

It’s a very compelling offering which is why Xero is growing subscribers across the world. New Zealand, Australia and UK are particularly strong markets for Xero.

Xero has such high gross profit margins that every new subscriber adds a lot to the overall business position. The monthly recurring revenue is an attractive feature.

Time will tell what COVID-19 does to Xero and its SME customer base in the shorter-term, but I think Xero has a very compelling offering. Particularly as a cloud-based product that can be accessed from anywhere.

The ASX 200 tech share could eventually become one of the ASX’s biggest businesses if it can keep expanding in the US and UK.

I’d want to wait for a share price under $80 before buying Xero shares.

REA Group Limited (ASX: REA)

REA Group has a very strong market position. It owns realestate.com.au, Australia’s leading property portal. If you want to try to get the best price for your property then you’ll probably use REA Group’s services.

I like REA Group as a diversified play on the property market without having to actually own a property to profit from property.

The ASX 200 tech share is rising again as conditions for property selling return to normal in Australia. There are some potential changes coming up that could cause more property transactions. The end of jobkeeper and a change to stamp duty could cause more properties to come into the market. Higher volumes would obviously be better for REA Group.

I’m also attracted to the idea that REA Group can grow a lot into the future with its stakes in international property sites in North America and Asia. But in the current conditions I’d wait for a share price under $100.

Foolish takeaway

Each of these ASX 200 tech shares have very compelling futures. But with the COVID-19 uncertainty I think we can be picky with our buying, even with how low interest rates are at the moment. That’s why they’re on my own watchlist right now, I’m waiting for a bit of a cheaper price. But for long-term buys I think they’d still be good ideas.

More reading

• The Kogan share price is surging higher following another positive business update
• Is the Westpac share price too high?
• The Xero share price just hit a record high: Is it too late to invest?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Xero. The Motley Fool Australia has recommended REA Group 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 3 of the best ASX 200 tech shares for your watchlist appeared first on Motley Fool Australia.

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The Kogan.com Ltd (ASX: KGN) share price is surging higher this morning following another strong business update.

Kogan has provided the market with an update of how it has performed during the fourth quarter to date, in light of the coronavirus crisis.

The Kogan share price has been experiencing a very strong rally in recent months. Kogan shares dropped to a low of $3.45 in mid-March but closed yesterday at $11.40. That’s a massive 230% increase. The rally has been particularly strong since mid-May and appears set to continue based on morning trade today. At the time of writing, Kogan’s share price has already climbed nearly 9% since the market opened.

The S&P/ASX 200 Index (ASX: XJO) in comparison, has seen a much more modest recovery since the March crash.

Customer base and sales continue their upward trajectory

Kogan revealed today that its active customer base has continued on a strong growth trajectory. There were an additional 126,000 active customers added during May to now total 2,074,000. That’s an increase of 6.5%.

Gross sales for Kogan soared higher by more than 100% in the fourth quarter to date (April and May), compared to the equivalent period in 2019.

Kogan previously revealed to the market that the pipeline for new sellers in its Kogan Marketplace remains very strong. This is helping to boost the company’s strong sales momentum and, as such, the Kogan share price.

Profitability continues to climb

Kogan’s profitability also continues to improve. The company’s gross profit increased by more than 130% during April and May.

EBITDA growth was even more impressive. Adjusted EBITDA climbed by more than 200% in the prior two months, compared to the corresponding period.

When EBITDA is adjusted for the financial year to date, it grew by more than 50%. Also, a very impressive result.

Kogan’s strong growth during the last two month follows on from a very strong March quarter. The Aussie ‘etailer’ revealed back then a strong 30% increase in gross sales and a 23% jump in gross profit during the March quarter.

There has been a sharp increase in spending at online retail sites such as Kogan and Amazon since lockdown restrictions were implemented. With more Australians working from home, Kogan has been cashing in on strong demand for goods such as PCs and laptops. Also, other home office accessories as well as home fitness equipment have proven very popular with Aussies isolating at home. Whilst many companies have suffered significant revenue losses due to the COVID-19 crisis, the pandemic has largely been good news for the Kogan share price.

Where to next for the Kogan share price?

In more good news, Kogan also revealed today that it ended the month of May with $58.6 million of cash on its books. The company also has a debt facility which was drawn to $26.0 million. So, its cash position is fairly solid. As mentioned, Kogan’s share price is up by another massive 9% to be trading at $12.41. However, with such a strong rally since mid-March, I feel that Kogan may see some high share price volatility in the months ahead.

More reading

• 3 of the best ASX 200 tech shares for your watchlist
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher
• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares

Motley Fool contributor Phil Harpur owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com 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 Kogan share price is surging higher following another positive business update appeared first on Motley Fool Australia.

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