ASX tech shares have been among the best performing market sectors over the past year. Here we look at two ASX tech shares that are on my buy list right now: Dicker Data Ltd (ASX: DDR) and Appen Ltd (ASX: APX). Here’s why they are both in my buy zone:
Dicker Data has evolved over the past few decades from a small, family run business to a sizeable company with a market capitalisation of around $1.2 billion. This ASX tech share is a wholesale distributor of computer hardware, software, and cloud-based solutions. Dicker Data is also the largest Australian-owned hardware distributor in Australia and New Zealand.
The Dicker Data share price has been quite volatile over the past few months, however is now trading at similar levels to where it was at before the coronavirus pandemic.
Dicker Data recently revealed that unaudited revenue for the half year to June 2020 amounted to $1 billion. That was a very strong 18.3% increase over the prior corresponding period. Growth was driven by strong demand for remote working solutions during the pandemic. June was a particularly strong month for the ICT vendor and saw it record $224 million in revenue. Unaudited net profit came in at $40 million, which was a 25% lift on the first half of FY 2019.
I believe that Dicker Data is well placed to tap into the growing demand for local IT services over the next decade. In particular, the ever growing trend of cloud computing is likely to drive the company’s revenues higher.
The Appen share price has been on a tear in recent months. After falling in the early phase of the pandemic to $17.14 in mid-March, it is now trading at $36.17. That’s a massive increase of 111%!
Appen leads the market globally in providing data for use in machine learning and artificial intelligence (AI). Apart from servicing major tech companies, Appen’s reach extends to a range of industries including the automotive and government sectors.
In a recent market update, Appen indicated that there has been minimal impact from the pandemic so far on its operations and major customers.
Despite the strong recent rally in the Appen share price, I believe the company remains well placed to deliver continued strong growth over the next decade. The uptake of AI products and machine learning solutions is likely to continue surging higher, leading to growing demand for Appen’s products and solutions.
Although each is from very different segments of the technology sector, both Dicker Data and Appen are on my buy list right now. These ASX tech shares have strong and established positions in their technology niches. And, in my view, both are well placed to deliver above average shareholder returns in the next 5 years.
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Motley Fool contributor Phil Harpur owns shares of Appen Ltd. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. 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.