The big investment headlines over the last week or so have been about the huge American tech companies, whose shares have all reclaimed the ground they lost in the COVID-19 market slump.
For the first time since January the big four technology stocks – Apple, Amazon, Microsoft and Alphabet (Google’s parent company) – were all valued by the market at over US$1 trillion each.
That sounds great if you hold shares in those companies or if you think you’d like to spend US$3000 on a single Amazon share, or US$1500 for one share in Alphabet.
Those companies, however, are not the only technology shares on the rise right now, and some of the up and coming stocks are much smaller companies, and some of them are Australian and listed on the ASX.
Across the developed world, many technology companies have been beneficiaries of the COVID-19 economy.
Online shopping and e-commerce has boomed, along with remote working and communication while many corporates are bringing forward technology investments as they see they need to transform to survive.
Perhaps the best known Australian example of this trend is online retailer Kogan, whose shares have gone from $7.44 at the beginning of January to $16.57 as of this week. In March 2019, you could buy Kogan shares for $3.45.
Buy now pay later provider Afterpay – which is considered a “fintech” company by investors – has turned into another ASX market favourite, and they’ve followed a similar trajectory.
You could have bought Afterpay at $12,44 in March after the market tumbled, but today one share will cost you $68.00 as the company raises money to grow and enter the US market.
Those two might be the best known, but there are hidden gems among ASX listed technology stocks which might be worth further research.
Accounting software provider Xero has been one strong performer as many small businesses get a grip on their finances.
If you’d like a stake in the so called “fourth industrial revolution” then shares in machine learning company Appen could warrant a look. The shares have doubled in value to $36.74 in the last three months.
Some other names to investigate: audio visual networking company Audinate Group, superannuation solutions provider HUB24, or cloud software leader Rhipe.
The COVID-19 sharemarket shock of March has created a new market dynamic where some sectors are thriving while others – such as traditional retail – are diving.
The disruptions are creating a fragmented market where value and growth can be found if investors do their research.
A good place to start that investigation, right now, could be to look at some of the technology stocks and understand if their business models are right for the post COVID world.