With the New Year fast approaching, we present three tech stocks to watch on the ASX in 2020. The tech sector on the ASX has produced some major winners in recent years. Companies like Afterpay Touch Group Ltd [ASX:APT] and Xero Ltd [ASX:XRO] spring to mind.
But our goal today is to cast a wider net — and hopefully illustrate the enormous potential of the Australian tech sector from an investment perspective.
A lot depends, of course, on which way you think markets will go next year.
The outlook amongst the editors at Money Morning is generally bullish.
Ryan Dinse for instance, recently made a great case for 2020 being a breakout year for markets.
Looking at the global wave of interest rate cuts, it seems central bankers will stop at nothing to keep this run going.
So, whether you agree with their policy settings or not (probably not), you should be prepared to take advantage of what they throw up.
As markets get dicier, tech stocks carry greater risk, but more reward too.
The key is to be aware of the large money flows within the tech space in order to pick winners.
For this reason the first two stocks we discuss have exposure to AI, while the last one acts as balancing force and could be a safer bet (it’s like a tech infrastructure play).
Anyway, here are three ASX-listed tech stocks that we believe should be on your radar in 2020.
Livetiles Ltd [ASX:LVT] started in 2014 and provide AI-powered intranet solutions.
Its products bring together a powerful package of office software such Office 365, Azure, and SharePoint, with a specific focus on commercial, government, and education markets.
Based in New York, it runs on a SaaS (Software as a Service) model so it gets recurring revenue from the deals it makes.
Its annualised recurring revenue (ARR) is up 131% on the same time last year (pcp) to $42.9 million.
Today it announced the acquisition of CYCL AG, another intelligent intranet software business for a maximum total purchase price of $32.2 million.
It’s a big outlay and the recent fall in the LVT share price may be reflecting this:
That being said, for a tech company that has rapidly grown revenue in the last year, Livetiles is worth a look.
Alcidion Group Ltd [ASX:ALC] has been on a stellar run and is a stock that we watch closely at Money Morning.
It’s up 388% in a 12-month window.
Alcidion does AI-powered health informatics.
The have a clinical decision support system (CDSS) which is designed to improve health outcomes by upping safety and productivity.
AI in healthcare is projected to be a massive growth field as you can see below:
Alcidion’s great run could just be kicking off if it manages to continue inking new deals.
NextDC Ltd [ASX:NXT] is massive compared to ALC and LVT, with a market cap of $2.3 billion.
As such, it could be seen as a safer play than the first two.
NextDC develops and operates data centres and is both an infrastructure play and a tech play.
Call it tech infrastructure.
The appeal of NextDC is that even in a market downturn, we still need connectivity.
In FY19 their revenue was up 15% to $179.3 million.
They posted a statutory loss of $9.8 million after ploughing a record amount of money into capacity.
If you want a piece of the tech pie, but can’t stomach the potentially greater risk associated with smaller companies, NextDC is worth your consideration.
If you want to learn more about our favourite AI/automation tech stocks, download this report to get detailed profiles of four companies pushing the boundaries. It presents an exciting mix of health, semiconductor, construction, and machine learning data companies. Download.
For Money Morning