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The Cochlear Limited (ASX: COH) share price has recovered most of its lost ground over the past couple of years. It’s almost back to where it was before the COVID-19 pandemic hit the world.

Cochlear describes itself as a leader in implantable hearing devices that help to restore hearing and connect people to a world of sound.

Is the Cochlear share price going to keep rising?

No one has a crystal ball that can say exactly what share prices are going to do next.

However, analysts can estimate what they think a business is worth and the direction a share price is headed.

Citi is one of the latest brokers to give an updated opinion on the business.

The broker has a buy rating on Cochlear shares with a price target of $235. That implies a possible upside of around 5% over the next 12 months.

Citi has noticed the recent ASX share market volatility. The prospect of interest rates going up as well as the Russian invasion of Ukraine has caused a pullback on the Cochlear share price.

However, the reason for optimism about the ASX healthcare share is COVID-19 impacts subsiding could mean a boost for Cochlear.

Analysts at Morgans also expect the company’s positive performance over the last 12 months to continue in coming years. Morgans has an add rating and a $233.20 target on the Cochlear share price.

Cochlear’s recent growth and outlook

In the recent FY22 half-year result, the company reported that Cochlear implant units increased by 7% to 18,598 with sales revenue growing 10% to $815.3 million. Cochlear said there was strong demand for sound processor upgrades and new acoustic implant products.

However, Cochlear implant revenue continued to experience variability in performance across countries with intermittent COVID-related restrictions reducing operating theatre capacity.

Developed market volumes were ahead of pre-COVID levels despite a modest decline in the half, and its market share position remained “strong”.

Cochlear reported that underlying net profit after tax (NPAT) grew by 26% to $157.5 million.

In terms of the outlook, the company said the underlying net profit guidance range was still $265 million to $285 million, which would represent an increase of between 13% and 22% on FY21. That guidance now includes cloud computing expenses and anticipates continuing COVID-19 impacts for the rest of the financial year.

The second-half trading was tracking in line with the first half. Elective surgery restrictions are hampering some activity. Operating theatre capacity is also being affected by hospital staffing shortages. It’s expecting a lower rate of growth for Cochlear implants for the financial year than originally forecast.

However, despite the ongoing disruption to surgeries caused by COVID, Cochlear continues “to be confident of the resilience” of its business over the longer term.

Long-term opportunity

The Cochlear share price could be influenced by the company’s ability to capture the market opportunity ahead.

The World Health Organisation estimates there are more than 60 million people worldwide who have severe or higher hearing loss. Cochlear says there is a significant, unmet, and addressable clinical need for implantable hearing solutions, with less than 5% market penetration.

It benefits from a growing annuity income stream from the servicing of the expanding recipient base.

Cochlear share price snapshot

The Cochlear share price is down 1.68% at $219.56 in early trading today. However, it is up around 5% over the past year and more than 3% this year to date.

It is now trading at similar levels to what it was before the COVID-19 pandemic took hold in March 2020.

The post The Cochlear (ASX:COH) share price has bounced back from the pandemic. Are there more gains to come? appeared first on The Motley Fool Australia.

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• 2 of the best ASX healthcare shares to buy now, according to analysts

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

A little over two weeks after it announced receipt of “conditional approval” to open its $5.5 billion gigafactory in the town of Grünheide near Berlin, Tesla (NASDAQ: TSLA) officially announced the factory’s opening on Tuesday. Reports say that CEO Elon Musk literally danced in joy at the opening.  

Investors are pretty happy, too, because today, Tesla stock is up 3.3% as of 11:05 a.m. ET. 

So what

Why is this such a big deal for Tesla? As The Wall Street Journal explained yesterday, Tesla plans to grow its Berlin gigafactory to the point where it will be able to produce 500,000 cars per year — but that’s just one part of the good news.  

By building cars in Europe, Tesla will be able to avoid both the cost of shipping cars to Europe from plants in the U.S. and China as well as import tariffs — two factors that should lower the price of its cars, encourage more sales in Europe, and make Tesla better able to compete with local car rivals such as BMW and Volkswagen. As Musk said in a statement, “[It] makes a huge difference to capital efficiency to localize production within a continent.”

Additionally, the plant’s location in Germany will make it easier for Tesla “to tailor vehicles to local tastes,” notes the Journal, which should also help with sales.

Now what

Not that Tesla necessarily needs help. As the Journal points out, sales of electric vehicles (EVs) and plug-in hybrids in Europe nearly doubled as a percentage of overall sales last year, to 18%. Tesla’s biggest challenge at this point will be ramping up production to satisfy all the demand for EVs in Europe.

Granted, as the CEO pointed out last night, “The start of production is nice, but volume production is the hard part.” But with Tesla targeting 5,000 to 10,000 cars per week produced by the end of this year, it seems the new German plant will be at least 50% operational — and potentially even fully operational — in just eight more months, maxing out its 500,000 car-per-year capacity.  

Simply put: Tesla’s off to the races in Germany. No wonder investors are excited. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock went up again appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BMW. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The JB Hi-Fi Limited (ASX: JBH) share price is charging higher on Thursday morning.

At the time of writing, the retail giant’s shares are up 4% to $52.76.

Why is the JB Hi-Fi share price charging higher?

Investors have been bidding the JB Hi-Fi share price higher today after the retailer released an update on its sales performance during the second half.

According to the release, for the period 1 January to 23 March 2022, the company continued to see heightened customer demand and strong sales growth.

The JB Hi-Fi Australia business was the star of the show, with comparable store sales up 10.5% during the period. This led to total JB Hi-Fi Australia sales growing 11.3% quarter to date. This means that total JB Hi-Fi Australia sales year to date are now up 1.5%.

It was a similar story for The Good Guys business, which reported a 5.1% increase in comparable store sales and a 5.7% lift in total sales. This has taken its year to date sales growth to 1%.

Another positive was the improving performance of the JB Hi-Fi New Zealand business. After posting sales declines during the first half, it has bounced back and has delivered a 2.9% lift in comparable store sales and total sales so far in the third quarter. As a result, the JB Hi-Fi New Zealand business’ sales are now down 2.5% year to date.

What about profits?

While JB Hi-Fi hasn’t provided any earnings estimates for the period, it has revealed that operating leverage has been achieved.

Management commented: “This sales growth, combined with disciplined cost control, and stock availability and sales mix benefits in gross margins, particularly in The Good Guys, drove strong operating leverage across the Group.”

But with trading conditions remaining hard to predict, management won’t be providing any guidance at this point.

It advised: “Whilst the Group is pleased with the start to the second half, in view of the ongoing disruption arising from Covid-19 and other local and global uncertainties, the Group does not currently consider it appropriate to provide FY22 sales and earnings guidance.”

The post JB Hi-Fi (ASX:JBH) share price charges higher on strong Q3 sales growth appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is in the spotlight this morning after it posted an increase in interim profit and dividend in its financial results for the first-half of FY22.

The diversified investment firm reported a 281% uplift in adjusted profit after tax to $343.7 million and lifted its dividend by 11% to 29 cents a share.

Write-down drags Soul Pattinson to statutory first half loss

However, statutory net profit after tax (NPAT) swung dramatically to a loss of $643 million in the six months to end January 2022 from a gain of $68.9 million in 1HFY21.

The loss was largely due to a one-off write-down of goodwill associated with its acquisition of Milton Corporation.

Operational highlights

• Net cash flow from investments on a like-for-like basis (excluding the acquisition of Milton) was up 81% (compared with first half FY21).
• Pre-tax net asset value per share up 3.4% for the period (outperformance of 8.6% against market).
• After tax net asset value per share up 17.7% over first half (outperformance of 22.9% against market).
• Milton successfully integrated and providing greater diversification and liquidity to pursue new investments across a range of asset classes.

Exposure to materials lifts Soul Pattinson’s first half profits

But shareholders still have many reasons to cheer. The sharp increase in Soul Pattinson’s “regular” NPAT is driven by several factors.

It’s exposure to resources and material is one factor. The group owns a large stake in coal miner New Hope Corporation Limited (ASX: NHC) and copper and zinc miner Round Oak Metals.

Its holdings in Brickworks Limited (ASX: BKW) is no doubt a boon too. This is especially after the building materials and property group also delivered a large increase in profits.

Commenting on the results, group managing director Todd Barlow said:

We are particularly pleased with the strong performances from New Hope, Brickworks and Round Oak Metals which all saw significant increases in profitability.

Our focus is on investing in, and supporting, businesses with strong prospects over the long term and backing good people to manage those investments. Resilient businesses which are low-cost and generate solid cashflows should continue to perform in all parts of the cycle.

Rising markets and merger benefits

Another driver for Soul Pattinson’s strong profit results is the strong returns generated by the S&P/ASX 200 Index (Index:^AXJO) during the reporting period.

Management also credits the higher dividends it collected from its large cap share portfolio for the profit surge.

Then there is its acquisition of Milton, which contributed positively to its earnings report card. The merger helped pushy net cash flow from investments by 42% per share.

Further, it improved liquidity in Soul Pattinson’s shares and lifted net asset value per share by 17.7% over the first half. This represents an outperformance of 22.9% against its market benchmark.

Positive outlook could bolster Soul Pattinson’s shares

Management has painted a rosy outlook for the group. Barlow said that operational performance across the group’s portfolio “continues to be robust”. This is despite COVID-19, devastating floods and geopolitical tensions.

What’s more, Soul Pattinson hinted that it has sufficient firepower to buy the market dip. It was a net seller of assets during the reporting period when valuations were higher.

It noted that valuations have dropped to more reasonable levels and it sees strong opportunities in private equity and structured credit.

The post Soul Pattinson (ASX:SOL) share price on watch after 281% surge in net profit appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Webjet Limited (ASX: WEB) share price moved in circles for the majority of this month, registering a 1.8% gain.

Investors appear to have mixed feelings when it comes to deciding the value of Webjet shares in the current climate.

At Wednesday’s market close, the online travel agent’s shares finished 1.81% higher to $5.63.

What’s weighing down Webjet shares lately?

A catalyst as to why Webjet shares have failed to take off could be because of the war in Ukraine.

Russian aggression spooked global markets, sending commodities prices soaring. This is particularly in relation to oil, which airlines need to fuel the planes. Most likely this leads to higher ticket prices from airlines, in which Webjet’s profit margins could be squeezed consequently.

In addition, with war raging on Europe’s doorstep, passengers might be less likely to travel to the region.

Webjet operates in 22 countries that include the United Kingdom, Ireland and Europe, the latter of which is the biggest market.

In its first half results, the WebBeds division recorded $158 million in total transaction value (TTV) for Europe. Next on the list was the Asia Pacific region with $110 million, and North America at $93 million.

Webjet reported a cash surplus of $3.5 million per month, a significant turnaround compared to FY21. Severe lockdowns led the company to record an average monthly cash burn of $5.5 million in the previous financial year.

Webjet noted that TTV could reach pre-COVID levels by the second-half of FY23. The group portfolio will be a much leaner business, having trimmed 20% of operating costs.

All eyes will be on Webjet’s FY22 results which will be released sometime in late May.

Webjet share price summary

In the past 12 months, the Webjet share price has lost more than 5%. This is despite hitting a 52-week high of $6.89 as recently as October 2021.

The company’s shares are still a long way off their pre-COVID levels of around the $9 mark.

Based on valuation grounds, Webjet has a market capitalisation of roughly $2.14 billion.

The post Why has March been such a lousy month for the Webjet (ASX:WEB) share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In just two weeks, the Altium Limited (ASX: ALU) share price has gone up by 7%. Could the ASX tech share keep going up?

Altium shares are starting to recover from the significant fall that the company has seen from the beginning of the year.

Even now, the Altium share price is still down around 25% in 2022.

What are the prospects for the company?

Growth expectations

A quote from the grandfather of (value) investing, Benjamin Graham, could be applicable here for the Altium share price. Benjamin Graham taught Warren Buffett about investing early in his investment life.

Mr Graham said:

In the short run, the market is a voting machine. But, in the long run, it is a weighing machine.

In other words, a business is subject to changes in popularity in the short-term. But in the long run, it can prove itself with the financial numbers it achieves.

Altium says it is picking up the pace towards market dominance and accelerating its transformative vision to digitally connect electronic design and manufacturing to the broader engineering ecosystem.

It has many offerings which engineers can use, including Altium Designer, Octopart, NEXUS and more. The cloud platform of Altium 365 is seeing rapid adoption by subscribers.

In FY22, Altium is expected to report revenue growth of between 18% to 20%, with annual recurring revenue (ARR) growth of between 23% to 27%.

By FY25 or FY26, it is aiming to reach US$500 million of revenue with 100,000 Altium Designer subscribers. Recurring revenue is expected to reach around 95% of the total, excluding China. The progress towards these goals could be an important influence on the Altium share price.

How Altium plans to win

Altium says that it’s going to aggressively scale enterprise sales and bring forward direct monetisation of Altium 365. To sustain high growth and take advantage of opportunities, Altium says it must bring in new talent as it transitions beyond a software and product company to a cloud and platform company.

The ASX tech share believes that it is exceptionally placed to take advantage of the post-pandemic conditions and to attract top-level talent.

The margin impact of hiring talent and paying them with shares has already been included in Altium’s ‘flight path’. The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin for FY22 is expected to be between 34% to 36%, with expectations it will grow close to 40% by FY25 or FY26.

Altium boasts that it has the only digital platform connecting electronic design to realisation in the mainstream engineering market.

Altimade is an area where the company sees growth, alongside its core software. This provides cloud-based ‘smart’ manufacturing that aims to improve productivity and manufacturability of electronics hardware and manage the supply chain of components as well as production risk.

Is the Altium share price a buy?

The broker Bell Potter currently has a buy rating on the Altium share price, with a price target of $38.75. That implies a potential upside of around 15% from the current price.

However, Citi rates it as a hold with a price target of $34.10, which is only slightly higher than where it is now.

The post The Altium (ASX:ALU) share price has leapt 7% in 2 weeks. Could it be heading higher? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Brickworks Limited (ASX: BKW) share price will be on watch this morning.

This follows the release of the building products company’s half year results.

Brickworks share price on watch amid strong profit growth

• Revenue up 24% to $535 million
• Underlying earnings before interest and tax (EBIT) up 254% to $450 million
• Underlying net profit after tax up 269% to $330 million
• Fully franked interim dividend up 5% to 22 cents per share

What happened during the first half?

For the six months ended 31 January, Brickworks reported a 24% increase in revenue to $535 million and a 254% jump in underlying EBIT to $450 million. The latter compares to Citi’s estimate of $321 million, which could bode well for the Brickworks share price today.

The company’s top line result was driven by a 6% increase in Building Products Australia revenue to $330 million and an 84% lift in Building Products North America revenue to $187 million. The latter reflects the acquisition of IBC in August 2021.

Whereas its earnings growth was driven largely by investment earnings of $73 million and a $349 million increase in the value of its share of its joint venture property trust with Goodman Group (ASX: GMG) to $1,260 million. This was supported by a 66% increase in Building Products earnings to a more modest $27 million.

In light of the source of its earnings growth, Brickworks has only increased its fully franked interim dividend by a single cent or 5% to 22 cents per share.

Management commentary

Brickworks’ Managing Director, Mr. Lindsay Partridge, was very pleased with the performance of its property trust.

He said: “We have seen strong demand and sustained growth in the value of our Property Trust over a number of years. The pandemic has only fuelled this growth, by accelerating industry trends towards online shopping and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions. These trends are reflected in our independent revaluation process, that has resulted in average capitalisation rate compression of 50 basis points to 3.6%, across the leased assets within the Property Trust.”

Looking ahead, Mr Partridge appears optimistic on the company’s future but warned of potential challenges.

He commented: “Brickworks is in a strong position, with a diversified portfolio of attractive assets. The increasing scale of our operations means we are on track to record over $1 billion in annual Group revenue, for the first time.”

“Of course, the outbreak of war in Ukraine has created increased uncertainty that has the potential to significantly impact all of our businesses in a variety of ways. These impacts may include the price and availability of energy, upward pressure on inflation and interest rates and a decline in consumer confidence. Further strain on international supply chains is already evident, with shipping rates increasing back to levels not seen since the worst of the pandemic,” Partridge added.

New operational property trust

In light of the overwhelming success of its joint venture with Goodman, the two parties are intending to launch a new operational property trust.

The release advises that Brickworks has been exploring opportunities to realise value from its portfolio of operational land and is now in advanced discussions in relation to a potential transaction that would include the launch of a new joint venture property trust in partnership with Goodman, comprising a portfolio of properties tenanted by Brickworks’ building products business.

An initial portfolio of 15 building products’ properties, with a total gross value of around $415 million, has been identified for inclusion in the first stage of the jointly owned operational property trust. The sale and lease back of these manufacturing sites will deliver gross cash proceeds of around $200 million and an estimated pre-tax profit of $260 million to $280 million.

Mr Partridge said: “The partial sale of a selection of our manufacturing sites will enable Brickworks to secure cash proceeds and recognise profit from the significant underlying land value of these sites. Over the longer term, the partnership with Goodman will support further value creation, with some properties having the potential for development and greater utilisation.”

The post Brickworks (ASX:BKW) share price on watch amid 269% first half profit jump appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks. The Motley Fool Australia owns and has recommended Brickworks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s been a brutal year for many ASX shares.

Sure, the S&P/ASX 200 Index (ASX: XJO) is only down 2.7% for the year. But resources and financial stocks are carrying the load.

For most companies outside those sectors, 2022 has been a bloodbath.

One fund manager had the unenviable job of notifying his clients that 2 of the stocks in their portfolio had fallen around 20% last month.

But Glenmore Asset Management portfolio manager Robert Gregory also explained why he’s keeping the faith that they would rise again:

‘Very comfortable with the earnings outlook’

NBN competitor Uniti Group Ltd (ASX: UWL) saw its share price plummet 21.3% in February.

Gregory reckoned this fall “seemed excessive”, because it reported great numbers that met analyst forecasts.

“Uniti delivered a solid 1H22 result, with underlying EBITDA of $70.5 million, up +9%, despite a fall in construction revenue (covid related),” he said in a memo to clients.

“The company said it was on track for FY22 underlying EBITDA of $145 million, which again was in line with expectations.”

He put down the shocking month to a general selloff of mid-cap growth shares.

“We remain very comfortable with the earnings outlook for the company.”

Uniti shares jumped a massive 10.7% on Wednesday after media reports that Macquarie Group Ltd (ASX: MQG) was planning to acquire the company.

The stock was placed in a trading halt at around 3 pm AEDT.

Not a good result, but well-placed for the future

Mineral Resources Limited (ASX: MIN) did not share the joy of its resources peers as the stock price dropped 18.3% in February.

This was due to “lower than expected” realised iron ore prices plus higher operating costs, according to Gregory.

“Interim EBITDA was $156 million, which was well below market expectations and 1H21, which was $607 million,” he said. 

“The Mining Services business was the top performer (EBITDA of $282 million), whilst Mineral Resources’ lithium and iron ore mining divisions both reported losses.”

Gregory admitted the financials were “disappointing” but is still bullish on the stock.

“We remain positive on Mineral Resources’ medium-term prospects, particularly the 30mtpa Ashburton iron ore project (targeted to commence in 2H of 2024), which although not yet formally approved, will be a much lower cost source of iron ore production, and hence should be profitable even in periods of lower prices.”

The post 2 ravaged ASX shares that will rise again: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is the bloodbath over for technology stocks?

That’s what many investors, especially those who dipped their toes in over the past 2 years, will be thinking.

The S&P/ASX All Technology Index (ASX: XTX) is down 23% since November, which is testing the patience of growth investors. 

But could such a dip present some bargains?

Medallion Financial managing director Michael Wayne reckons it currently does “make sense” to consider buying some “quality names” with a view to holding them for at least 2 to 4 years.

“Markets tend to get overly negative on the downside and overly optimistic on the upside,” he told Switzer TV Investing.

In the current situation, Wayne likes the look of 3 ASX tech shares in particular:

Anytime this stock is less than $100, grab it

Wayne’s team has high conviction that Xero Limited (ASX: XRO) shares are a bargain at the moment.

The stock price for the accounting software maker has plummeted around 28% for the year so far, closing Wednesday at $102.93 after hovering around $100 for most of the day.

“Xero’s one we’ve actually been buying over the last week or so,” he said.

“Anything sub-$100 we think, on a long-term basis, will be fairly attractive.”

Wayne is not sure why the Xero share price has been through wild volatility in the past 12 months, but he has much faith in the underlying business.

“It’s a very high-quality business,” he said.

“They’ve turned profitable in the last 12, 18 months. They continue to grow very nicely in the UK and US, and continue to chip away in Australia and New Zealand.”

‘Basically a monopoly’

Audio technology maker Audinate Group Ltd (ASX: AD8) has been an investment that Wayne has spruiked for some time now.

Despite losing one-third of its value since 10 December, he’s still keeping the faith.

“We still like it. We think it’s very good quality,” said Wayne.

“The fact that it’s basically a monopoly in that space at the moment, growing many multiple times the nearest competitor, we think it’s worth persisting.”

Audinate’s flagship product is Dante, which is a network protocol that allows audio equipment at large venues to talk to one other without wires.

Wayne attributed the recent struggles to COVID-19-related supply chain issues, which is not a chronic problem and shows continuing demand.

Share price dropped while business has improved

Network-as-a-service provider Megaport Ltd (ASX: MP1) has seen its share price plunge 27% so far in 2022.

But Wayne is licking his lips at this discount because the company showed very positive numbers in last month’s financials.

“When you consider Megaport was $20 not that long ago, and $13 at the moment — and the business has fundamentally improved, then we’re confident,” he said.

“This is a company that’s meant to be turning profitable in the next 6 months or so.”

Wayne’s not the only fan of Megaport, with Firetrail portfolio manager Matthew Fist last week singing its praises.

“If you become a Megaport customer, in the first year you’re going to spend $1. Every single year after that, you increase the amount you spend with Megaport by 45%,” he said.

“This makes Megaport, in our view, one of the highest quality companies on the ASX.”

The post 3 ASX tech shares worth buying now to hold for years appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns AUDINATEGL FPO, MEGAPORT FPO, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended AUDINATEGL FPO, MEGAPORT FPO, and Xero. The Motley Fool Australia owns and has recommended AUDINATEGL FPO and Xero. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Technology shares have been in freefall since November, with the S&P/ASX All Technology Index (ASX: XTX) losing 23% since then.

But as we see a mini-revival in March, the question remains whether some tech stocks have been sold too much.

After all, interest rate fears have triggered the market to dump high-growth ASX shares — but those rate hikes haven’t actually happened yet.

So is it foolish to buy now when there is more pain to come?

Burman Invest chief investment officer Julia Lee reckons selective buying is key at the moment.

“As interest rates rise, if you don’t have any profit or cash flow coming through then your valuation is going to deteriorate very rapidly,” she told Switzer TV Investing.

“So it is important to back those more mature companies… that do have a stable growth outlook as well as profit coming in through the door.” 

As such, Lee named 3 ASX shares that currently fit these criteria:

3 mature companies with a stable outlook 

Lee said that the technology sector has “some interesting companies” worth consideration.

“Block Inc CDI (ASX: SQ2)… probably has a valuation north of about $200 and it’s trading at about $180,” she said.

“Altium Limited (ASX: ALU), there’s some strong momentum coming into its business… And Xero Limited (ASX: XRO) has been smashed in the year-to-date.”

The common attribute with this trio, according to Lee, is that they have been reporting good numbers. So the current dip in market valuation is a severe mismatch.

“The share price action has been horrible in 2022 so far,” she said.

“But if you have a look at the fundamentals, there are some companies that have exceeded expectations and are showing strong signs of momentum.”

Lee thought Australian investors might have a false impression of Block because of its association with Afterpay.

“But really, it’s a payments company. So it is exposed to small and medium enterprises. It also helps get websites off the ground.”

The US company announced “quite a good earnings result”, she added.

“The fundamentals and the technicals have been saying something different. But now we’re seeing the share price playing a bit of catch up.”

Right on cue, Block shares spiked up a massive 5.17% on the NASDAQ and 7.49% on the ASX on Wednesday.

The post 3 beaten-down technology ASX shares to buy right now: expert appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX growth shares to buy
• Is the Xero (ASX:XRO) share price on the way back up to its January highs?
• Why is the Block (ASX:SQ2) share price going gangbusters today?
• Why Block, Calix, Carnarvon, and Imugene shares are racing higher
• Leading the pack! ASX tech shares storm higher on Wednesday

Motley Fool contributor Tony Yoo owns Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium, Block, Inc., and Xero. The Motley Fool Australia owns and has recommended Block, Inc. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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