Author: therawinformant

ASX shares can be a powerful tool to make your retirement dreams become a reality. Consistent, compounding returns can really add up if you give your portfolio time to grow.

How to turn $30,000 into $1,000,000 with ASX shares

Some investors would look at the above statement and think it just isn’t possible. I think it’s worth considering a few ASX shares in the past that have been able to do just that for their shareholders.

1. CSL Limited (ASX: CSL)

CSL is an ASX blue-chip share with a market capitalisation of $128.2 billion today. The CSL share price closed on Friday at $282.37 per share but the Aussie biotech company listed for a stock-split-adjusted $0.767 per share back in June 1994.

That means $30,000 invested in the CSL IPO would have netted an investor 39,113 CSL shares. Multiplied by today’s share price, and assuming a buy and hold strategy, that would be worth an astonishing $11,044,378 today. 

2. A2 Milk Company Ltd (ASX: A2M)

A2 Milk is another top Aussie growth share that continues to climb higher. In fact, the ASX dairy share is up 38.4% this year alone. 

If we rewind the clock a little bit, the A2 Milk share price was trading at $0.56 per share in April 2015. A $30,000 investment would, therefore, translate to holding 53,571 A2 Milk shares.

Multiplied by Friday’s closing price of $19.40, that would mean a buy and hold investor’s investment would be worth a tidy $1,039,277 today.

So, what’s the secret?

There are a few things that obviously need to go right to turn $30,000 into $1,000,000 with ASX shares.

The first thing you’ll notice is that both of these examples rely on a large dose of luck. Investing in IPOs is inherently risky and history has shown they tend to underperform.

The other thing is that both examples of rocketing ASX shares required the investors to buy and hold. Behavioural economics tells us that generally, investors have a lopsided risk profile. Loss aversion, where you sell your winners too early and hold your losers too long, can be a real a problem for investors.

It’s best to be patient and get out of your own way. Buy and hold your investments rather than overtrading and losing out in the long-run.

Reinvesting any dividends back into shares can also be a powerful way to turbo-charge portfolio growth in the decades ahead.

Foolish takeaway

If you can choose high-quality ASX shares early in their growth path, you might be the next investor to turn a $30,000 investment into $1,000,000.

More reading

• 3 of the best ASX 50 shares to buy right now
• Brokers name 3 ASX 200 shares to buy today
• 3 ASX dividend shares growing their payouts fast
• Why I would buy a2 Milk Company and these ASX growth shares right now
• Altium and these ASX 200 shares could be quality buy and hold options

Ken Hall 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 A2 Milk. 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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As an aspiring investor, one of the first metrics you may come across is the price-to-earnings ratio (P/E ratio). The P/E ratio is often one of the key statistics anyone telling you about an ASX share will quote. But how useful is the P/E ratio in 2020? And how should you use this ratio when evaluating shares today?

What is the P/E ratio?

The P/E ratio is calculated by using a very simple equation: a company’s earnings per share (EPS) divided by its share price. For our purposes, we can assume that a dollar of earnings is  universally consistent. That is, a dollar of earnings is still a dollar, whether it comes from Woolworths Group Ltd (ASX: WOW) or Xero Limited (ASX: XRO). In this way, the P/E ratio is used to determine how ‘expensive’ companies are relative to each other. If one company’s P/E ratio is 10, it means you are paying $10 today for $1 of earnings. If another company’s ratio is 20, you are effectively paying twice as much for that same dollar. 

Conventionally, companies that are growing revenue and earnings at a relatively fast rate attract a higher P/E ratio than those that are more mature and offer lower growth prospects.

How should ASX investors use the P/E ratio in 2020?

Normally, the P/E ratio is a great place to start when you are evaluating an ASX share as a potential investment. But 2020 has thrown a bit of a spanner in the works. Under ‘normal’ economic circumstances, a good-quality company can be expected to grow its earnings every year. This means that a company’s trailing P/E ratio (encompassing the previous 12 months) will be higher than its forward P/E ratio (which uses a company’s earnings guidance to hypothesise a future earnings ratio with today’s share price).

But, as we know, 2020 has brought massive disruption to the economy in the form of the coronavirus pandemic. The lockdowns that were necessitated by the outbreak have resulted in a huge hit to the earnings of many ASX companies. And since we mostly use trailing P/E ratios, this impact doesn’t translate very effectively to current share prices. If a company has a share price of $20 and brought in $1 of earnings in FY20, then it will have a trailing P/E ratio of 20. But if this same company only brings in 50 cents of EPS in FY21, then its forward P/E ratio will be 40.

Usually, markets are pretty savvy regarding a company’s immediate prospects. So, it’s likely this company’s shares would have been sold off when the impacts of the pandemic became evident. So if our company was sold down to $5 per share, its trailing P/E ratio would become 5 and its forward P/E ratio would become 10.

You can see how these fluctuations could possibly throw an investor off their game.

Foolish takeaway

I think using the P/E ratio to evaluate your investments in 2020 is highly risky. As such, I feel it should only form a small part of your overall valuation process. It’s a useful metric, but also one that can distort reality and induce poor investment decisions. I usually only find this ratio useful when comparing different companies in the same sector at the best of times. As such, I’m not paying it too much attention at all in this most uncertain of years.

More reading

• How I’d build a $100,000 share portfolio with ASX ETFs
• Here are the top 5 ASX tech shares on the All Tech Index
• 3 defensive ASX shares to add to your portfolio
• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• Is the Woolworths share price a buy?

Sebastian Bowen 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 Woolworths 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 P/E ratio is a flawed metric in 2020 appeared first on Motley Fool Australia.

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Building a $100,000 share portfolio with just ASX exchange-traded funds (ETFs) isn’t as complicated as you might think. ETFs are an easy way to get broad-market diversification using a single ASX investment. As such, it’s relatively simple to build a highly diversified, internationally exposed portfolio with just 4 ASX ETFs. The hardest part is getting the $100,000 sum together! Here’s how I’d build the portfolio:

Start with $30,000 in the iShares Core S&P/ASX 200 ETF (ASX: IOZ)

This ETF simply tracks the S&P/ASX 200 Index (ASX: XJO) – which consists of the largest 200 publicly traded companies in Australia. This includes everything from Woolworths Group Ltd (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA) to Afterpay Ltd (ASX: APT) and Harvey Norman Holdings Limited (ASX: HVN). Think of it as a ‘slice of Australia’. The ASX 200 is a great index to have as a core of a portfolio as it has a focus on both growth and dividend income.

Add $30,000 to the iShares Global 100 ETF (ASX: IOO)

The ASX 200 is a good start, but now we’re throwing in some international diversification. This ETF tracks the largest 100 companies across the advanced economies of the world, including the United States, Japan, South Korea, Europe, and the United Kingdom. Some of its largest holdings are household names like Apple, Nestle, Samsung, Microsoft and Alphabet (sometimes called Google). These companies are the real movers and shakers in the global economy. As such I think some exposure to them through this ETF is a great addition to our portfolio.

$20,000 for the BetaShares Nasdaq 100 ETF (ASX: NDQ)

This ETF tracks the largest 100 companies on the US Nasdaq exchange. The Nasdaq is the second-largest US share market (behind the New York Stock Exchange) and tends to mostly house companies in the technology space. You’ll find all five of the ‘FAANG’ stocks here, being Facebook, Amazon, Apple, Netflix and Alphabet (which, being formerly known as Google, represents the ‘G’). You’ll also find Tesla, NVIDIA, Adobe and PayPal. In my view, there’s no better way to gain exposure to some of the hottest and best tech shares in the world than with this ETF. That’s why it makes our list today.

Finish off with $20,000 for the BetaShares Asia Technology Tigers ETF (ASX: ASIA)

Our final ASX ETF for the portfolio is this Asian, tech-focused fund. ASIA is the ’emerging market’s’ answer to the Nasdaq 100. This ETF tracks some of the biggest names in the Asian technology space. The list includes Tencent Holdings, which you may recognise from its recent investment in Afterpay. But there’s also the ‘eBay of China’ in Alibaba, the ‘Netflix of China’ in iQiYi, the ‘Google of China’ in Baidu and the ‘Amazon of China’ in JD.com. Tapping into tech trends in emerging markets like China is a good idea in the 21st century in my view, so this ETF is in our portfolio to make that happen.

More reading

• Why the P/E ratio is a flawed metric in 2020
• These were the best performing ASX 200 shares last week
• Here are the top 5 ASX tech shares on the All Tech Index
• 3 ASX shares I won’t hesitate to buy in the next market crash
• What does COVID-19 and the payment revolution mean for Afterpay and Sezzle?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths Limited. The Motley Fool Australia has recommended Alphabet (A shares) and BETANASDAQ ETF UNITS. 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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There aren’t many ASX shares that I’d be happy to invest $1,000 into every month.

There are plenty of shares that are quality businesses like Altium Limited (ASX: ALU), Pro Medicus Limited (ASX: PME) and Pushpay Holdings Ltd (ASX: PPH). But the share prices of those companies have performed so strongly since March I’m not sure I could commit to buying them every month. No business is a ‘buy at any price’.

The ASX shares that I’d be willing to buy every month are ones that usually trade at a reasonable valuation, have good long-term prospects and have a history of producing good returns for shareholders:

Share 1: Magellan Global Trust (ASX: MGG)

Magellan Global Trust is a listed investment trust (LIT) which invests in the best overseas shares.

Quality really shines through during tough economic times. I think you can definitely call this COVID-19 period a tough economic time.

Some of Magellan Global Trust’s biggest positions at the moment include: Alibaba, Alphabet, Atmos Energy, Microsoft, Tencent, Facebook, Visa, Mastercard, Reckitt Benckiser and Novartis.

You may have noticed there’s a focus on technology businesses within its holdings. I think this is good. Technology businesses have changed the world over the past decade and that’s likely to continue. Businesses like Microsoft and Alphabet are important players in the shift to cloud computing. Visa and Mastercard are integral for facilitating the big change to ecommerce (accelerated by COVID-19). And so on.

The ASX share’s net investment performance has been solid since inception in October 2017, returning 11.4% per annum – outperforming its global benchmark by more than 1% per annum.

At the current Magellan Global Trust share price it’s trading at a 4% discount to the net asset value (NAV).

Share 2: BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

Many of the best shares in the world aren’t on the ASX. Indeed, the ASX only makes up 2% of the global share market. There are some great businesses out there in the world that are also doing their best to operate profitably and sustainably with an aim of doing the right thing for the climate.

This exchange-traded fund (ETF) is invested in around 200 businesses. None of them are involved in a number of excluded activities like gambling, tobacco, alcohol, junk food, destroying valuable environments and so on. This ETF particularly excludes businesses with direct involvement with the fossil fuel industry and it also excludes businesses with other bad climate credentials.

So what shares is it actually invested in? Its biggest holdings currently are: Apple, Nvidia, Mastercard, Visa, Adobe, Home Depot, Paypal, Netflix and Toyota.

I think this ETF is a good one to buy every month because it always trades at its net asset value, it’s a quality portfolio and the returns have been strong. Since January 2017 the ETF has returned an average of 20.7% per annum after fees.

Share 3: Wesfarmers Ltd (ASX: WES)

I think Wesfarmers is one of those ASX shares that you can invest in and leave for many years.

The conglomerate can trace its history back to 1914. It has great staying power. It’s an ASX share that you could have bought at almost any point over the previous decades and done well to date.

I think Wesfarmers’ solid performance can continue for two key reasons.

Its current group of businesses is a strong collection. Bunnings, Officeworks and Kmart are leaders in their respective retail segments. Online retailer Catch is growing at a fast pace, particularly due to the COVID-19 shift to e-commerce.

But I’m confident that I could continue investing in Wesfarmers into the future because it’s constantly evolving. The ASX share will happily invest in new businesses and divest old ones when it doesn’t suit to hold them any more, like its former coal assets.

At the current Wesfarmers share price it’s trading at 27x FY21’s estimated earnings.

Foolish takeaway

Of the three potential ASX share investments it’s hard to choose between Magellan Global Trust and the BetaShares ETF. I like the investment flexibility that the Magellan Trust has, but the ETF’s costs are 0.76% cheaper per year and it has outperformed the Magellan Global Trust.

More reading

• Why the Pushpay share price soared 19% in June
• 2 fantastic ASX growth shares to buy with $2,000
• Fund managers have been buying Costa and this ASX 200 share
• Why buying Altium shares could make you rich
• 3 ASX dividend shares growing their payouts fast

Tristan Harrison owns shares of Altium and MAGLOBTRST UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and PUSHPAY FPO NZX. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 ASX shares that I’d invest $1,000 into EVERY month appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was out of form last week and dropped notably lower. The benchmark index fell a disappointing 2.3% to 5,919.2 points.

Not all shares dropped lower with the market last week. Here’s why these ASX 200 shares were flying high:

The Netwealth Group Ltd (ASX: NWL) share price was the best performer on the ASX with a 18.4% gain. Investors were buying the investment platform provider’s shares last week following the release of its fourth quarter update. At the end of the quarter, Netwealth’s funds under administration (FUA) had climbed to a sizeable $31.5 billion. This means the company grew its FUA by $8.2 billion or 35% during FY 2020. This includes a negative market movement of $0.9 billion for the 12 months.

The Perseus Mining Limited (ASX: PRU) share price was an impressive performer last week with a 12.3% gain. The catalyst for this strong gain was another rise in the gold price. Traders were fighting to get hold of the precious metal after coronavirus cases spiked globally. Demand was so strong the gold price broke through the US$1,800 an ounce mark and hit a nine-year high. For the same reason, St Barbara Ltd (ASX: SBM) and Gold Road Resources Ltd (ASX: GOR) shares stormed 10.3% and 9.3% higher, respectively.

The Mesoblast limited (ASX: MSB) share price was on form and jumped 8.9% last week. Investors were buying the allogeneic cellular medicines developer’s shares after it provided an update on its allogeneic mesenchymal stem cell (MSC) product candidate, remestemcel-L. That update revealed that the product has been given an expanded access protocol for compassionate use in the treatment of COVID-19 infected children with cardiovascular and other complications of multisystem inflammatory syndrome.

The Megaport Ltd (ASX: MP1) share price wasn’t far behind with a gain of 8.4%. This was despite there being no news out of the global leading provider of elastic interconnection services. However, with the pandemic accelerating the shift to the cloud, investors appear confident that Megaport will be experiencing very strong demand for its services.

More reading

• ASX 200 drops 0.6%, Afterpay hits a new record
• 2 exciting ASX tech shares with enormous potential
• The Treasury Wine share price and this ASX 200 stock are the latest to be hit by broker downgrades today
• Fund managers have been buying Costa and this ASX 200 share
• Brokers name 3 ASX 200 shares to buy today

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 MEGAPORT FPO. The Motley Fool Australia owns shares of Netwealth. 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.

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Concerns over a spike in coronavirus cases weighed heavily on the S&P/ASX 200 Index (ASX: XJO) last week. The benchmark index fell a disappointing 2.3% to 5,919.2 points.

While a good number of shares dropped lower, some fell more than most. Here’s why these ASX 200 shares were the worst performers:

The Corporate Travel Management Ltd (ASX: CTD) share price was the worst performer on the ASX 200 last week with a 15.2% decline. Investors were selling travel shares last week after the outbreak of coronavirus in Melbourne sparked fears that the domestic travel market recovery could take longer than originally anticipated.

The Domain Holdings Australia Ltd (ASX: DHG) share price was out of form and dropped 12.5% last week. Once again, this appears to have been driven by the spike in coronavirus cases. Given how important the Melbourne market is to overall listing volumes, the six-week lockdown is likely to lead to a notable reduction in listings.

The AP Eagers Ltd (ASX: APE) share price wasn’t far behind with a 10.7% decline. This was despite there being no news out of the auto retailer last week. However, with its shares up more than 100% from their March low, investors may have been taking a bit of profit off the table. There may also be concerns that another outbreak could negatively impact near term car sales.

The Monadelphous Group Limited (ASX: MND) share price was a poor performer last week and fell 10.6%. This was also despite there being no news or broker notes relating to the engineering company. Investors may have concerns that the recent outbreak of coronavirus could weigh on its performance. In May the company advised that its Engineering Construction division experienced supply chain issues because of the pandemic. This was causing delays on large resources construction projects currently in progress, as well as a number of temporary deferrals to potential new construction contract award dates.

More reading

• ASX 200 down 0.5%: Afterpay completes placement, big four banks tumble
• These were the 5 best performing ASX shares last week
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
• The Webjet share price is dividing analysts even as it becomes a likely takeover target
• These were the best performing ASX 200 shares last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management 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.

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The WiseTech Global Ltd (ASX: WTC) share price was hit hard in the early phase of the coronavirus pandemic, falling from $29.44 in mid February to $10.48 in in mid March. Since then WiseTech’s share price has seen a partial recovery, however, it is now only trading at $20.34, well below its pre-COVID-19 levels.

Global trade is now picking up, which means WiseTech is gradually seeing its operations get back to normal levels. WiseTech continues to invest for future, and believes it is well placed to tap into the growing demand for logistics solutions.

So, is the WiseTech Global share price in the buy zone?

What is compelling about the WiseTech business model?

WiseTech Global is a world-leading developer and provider of software solutions to the logistics industry. Its customer base is now in excess of 15,000 and spans more than 150 countries.

As the global economy continues to grow, logistics – the process of manufacturing and efficiently delivering products to the end consumer – has grown more complex. WiseTech has carved out a very successful niche in addressing this growing issue.

WiseTech’s flagship product is CargoWise One. It can be tailored for each customer’s supply chain. It provides logistic services including customs brokerage, HR management, and online tracking and tracing.

CargoWise One doesn’t operate as a traditional subscription-based software-as-a-service (SaaS) product. WiseTech generates revenue depending on how an individual customer utilises the software. This enables WiseTech to grow its revenues as customers expand their usage. CargoWise One also has an extremely high 99% retention rate.

Strong revenue growth despite short-term challenges

WiseTech has continued to grow at a strong pace in recent times, in both size and scale via organic growth and targeted acquisitions. Between 1H16 and 1H20, WiseTech has grown its revenue base at a compound annual growth rate of 43%. The company continues to invest strongly to drive product innovation. This provides a solid foundation for future growth.

In February, WiseTech downgraded its earnings forecast for FY 2020. It now anticipates revenue growth of between 5% and 22%. This downgrade was driven by a sharp downturn in manufacturing and economic trade in the first few months of the coronavirus pandemic.

Foolish takeaway

With the WiseTech Global share price still well down on pre-COVID levels, I think now could be a good buying opportunity for long-term investors. As global trading begins to start to get back to more normal levels, I believe this should see WiseTech Global’s revenue stream start to pick up. I remain confident that WiseTech Global is well placed to grow it revenues over the next five years, driven by the rising demand for logistic solutions.

More reading

• Why GWA, Meridian Energy, Treasury Wine, & WiseTech Global are dropping lower
• The WiseTech share price is up 15% in a week. Too late to buy?
• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• What’s next for WAAAX shares?
• Should ASX investors be worried about insider selling?

Motley Fool contributor Phil Harpur owns shares of WiseTech Global. The Motley Fool Australia owns shares of WiseTech Global. 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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The recent market crash means that there are a number of cheap stocks available to buy in a variety of sectors. Certainly, their prices could move lower in the short run due to risks such as a weak global economic outlook and the potential for a second wave of coronavirus. However, over the long run they could deliver impressive returns that boost your retirement prospects.

As such, buying a diverse range of cheap shares today could be a sound move. They could offer significantly higher returns than other assets over the coming years.

Market crash

The recent market crash may have dissuaded some investors from buying cheap stocks. After all, it was one of the fastest declines in the stock market’s history. There may even be further risks ahead, with the potential for a second crash later in the year should a spike in coronavirus cases take place.

However, declines in the stock market are not all that uncommon. For example, over recent decades investors have experienced other bear markets such as the global financial crisis and the tech bubble.

As such, temporary declines in stock prices are likely to occur fairly regularly over an investor’s lifetime. While they can cause panic in the short run due to the paper losses they create, on a long-term view they provide buying opportunities that can positively impact on your portfolio’s performance.

Buying cheap stocks

A stock market crash presents an opportunity to buy cheap stocks across a wide range of industries. Weak investor sentiment and challenging trading conditions over the short run can combine to cause high-quality businesses to offer wide margins of safety. Over time, such companies are likely to experience improving operating conditions, rising profitability and growing sentiment among investors. This can lead to rising stock prices and high returns for investors who bought while stock prices were low.

Of course, ensuring that you purchase attractive businesses is highly important at the present time. Some companies may struggle to survive a period of weak economic performance that causes disruption to their operating environment. Therefore, focusing your capital on financially-sound businesses with wide economic moats could be a sound move that lowers your risks and boosts your long-term returns.

Relative appeal

Since the stock market has always recovered from its bear markets and downturns to post new record highs, buying cheap stocks today is likely to produce long-term growth via a successful recovery.

Moreover, on a relative basis the stock market appears to have significant appeal. Other mainstream assets such as cash and bonds lack return potential due to low interest rates that may remain in place over the medium term to support an economic recovery. As a result, stocks may be the most attractive means of improving your portfolio’s prospects and of increasing your chances of retiring early.

More reading

• 3 ASX shares that I’d invest $1,000 into EVERY month
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• Why I think the WiseTech share price is in the buy zone
• Here are the top 5 ASX tech shares on the All Tech Index

Motley Fool contributor Peter Stephens 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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ASX tech shares have been dominating the ASX news cycle over the past few weeks and months. Whether it’s Afterpay Ltd (ASX: APT) or Xero Limited (ASX: XRO) making new all-time highs every week or Zip Co Ltd (ASX: Z1P) shares rocketing more than 600% since March, these tech shares are never far from the headlines these days.

So I thought I would examine which ASX tech shares are the most dominant on the ASX today. The S&P/ASX All Technology Index (ASX: XTX) is the ASX index that tracks the tech space in Australia, so let’s take a look at the top 5 shares that move this index.

1) Afterpay Ltd (ASX: APT)

No real surprise that Afterpay takes the ASX crown with an 18% weighting in the index. Afterpay has been on an incredible run in recent months. After bottoming out at $8.01 in mid-March, Afterpay shares made yet another fresh record high at $76.62 in intraday trade yesterday – a trough to peak rise of 857% in just the last 3.5 months.

2) Xero Limited (ASX: XRO)

The second-largest ASX tech share in the index is cloud-based accounting software giant Xero with a 10.8% weighting. This is another company that investors can’t get enough of these days. Xero shares have climbed nearly 60% since their March lows and made a new all-time high just yesterday of $94.31.

3) Seek Limited (ASX: SEK)

Seek takes out the ASX tech bronze medal with an 8.2% weighting. Seek is the largest provider of online classifieds in the jobs and employment space. With its $7.55 billion market capitalisation, Seek is one of the companies that managed to effectively disrupt the old newspaper’s fabled ‘rivers of gold’ classifieds business model. Unlike Afterpay and Xero though, Seek shares haven’t been able to top their February highs just yet, although the Seek share price is still up nearly 80% from its March lows.

4) Computershare Limited (ASX: CPU)

Computershare is something of an ‘under the radar’ tech share these days. It has been around a while too, having started life back in 1978. This company makes a crust by managing share registries, corporate stock accounts and employee share plans. Chances are if you invest in ASX shares already, you will be familiar with its services. Like Seek, Computershare shares are still a ways off of their pre-March highs, although investors would have enjoyed the stock’s 55% surge since its March lows.

5) REA Group Limited (ASX: REA)

REA is our fifth and final ASX tech share on the XTX index. Another ‘newspaper disrupter’ at its heart, REA runs realestate.com.au – the most popular online real estate marketplace in Australia by a long-shot. This company has made its investors an absolute fortune over the past 2 decades with the REA share price up a staggering 37,400% since July 2000. REA shares took a big tumble in the March crash this year, but have since recovered more than 60% from their lows.

Foolish takeaway

AS you can see, ASX tech shares come in all shapes and sizes. But as this sector has shown in recent months, the tech space can be one of the most lucrative to invest in. The ASX tech index is one that deserves to be watched closely going forward, and I think all ASX investors should be familiar with its major holdings.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended REA Group Limited and SEEK 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.

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