Today, we’ll look at the best ASX tech stocks to buy on the ASX in 2023 that we think are the best Australian tech stocks to invest in.
Some of these ASX technology stocks tend to be in there infancy and there is a lot of upside built into the share price.
Considering that we are now in an environment where we are seeing a rise in interest rates, we are seeing a lot of pressure on technology stocks with high valuations being asked to justify their price.
Having said that, with the suppressed prices in tech stocks, we are seeing pockets of value with some stocks as they have mostly come down from their previously fairly frothy valuations.
The Best ASX Tech Stocks to Buy in 2023
This is a curated list of what we believe are the 5 best ASX tech stocks to buy in 2023. These companies all have an exciting, scalable product and a great business plan with strong upside potential.
These companies represent the best of what Australian technology stocks can offer.
Most importantly, a lot of these stocks have been really sold off due to the rise in interest rates.
Pro Medicus (ASX:PME)
Pro Medicus is a health tech software company that provides imaging tools/services to an array of clients such as hospital/diagnostics chains and independent practices.
The company got a serious shot in the arm due to the logistical disruption caused by the COVID-19 pandemic and a growing decline in radiology professionals.
While the former gave the company a shot in the arm, the secular tailwind is a global shortage of radiologists and increasingly complex testing data which can run into several gigabytes from a single test.
Pro Medicus’ revolutionary technology allows the easy sharing of huge datasets and brings scale to radiology diagnostics.
Xero is one of Australia’s biggest and most successful tech companies.
The company has slowly morphed from a niche SaaS (Software-as-a-Service) company into a tech conglomerate due to strong sector tailwinds and gradual but consistent growth.
Even through the rough macro environment of 2022, the company managed to grow reasonably well owing to the product’s non-discretionary nature.
The pandemic accelerated the already rapid growth of digitisation and business processes, a trend from which Xero has benefited hand over fist.
However, At the current XRO share price, Xero shares have corrected about 42% from its all-time high despite doubling the Lifetime Value of its customer base and growing its monthly revenue run rate by 34%.
PEXA Group (ASX:PXA)
PEXA Group (ASX:PXA) has a near-monopoly status in the burgeoning digital property settlements segment with 85% of all real estate transactions in Australia being routed through its platform.
The company has swung to profitability in 1HFY’22 with a clear demonstration of cash flow with economies of scale and substantial growth opportunities ahead.
The stock has been moderately down since its IPO in July of last year, with most of the listing gains being wiped out by the volatility following the war and inflation woes.
PointsBet Holdings (ASX:PBH)
PointsBet Holdings (ASX:PBH) is an online gaming operator whose business spans Australia and the Americas.
The pandemic spurred betting across the globe, but in the US, legal gambling has taken off and is in the midst of a historic expansion in activity.
The virus has sparked an unprecedented spike in online gambling and sports betting, in all their avatars, because casinos shut down and people were locked down inside their homes.
PointsBet has benefited from these market dynamics as apparent from its FY21 numbers.
IDP Education (ASX:IEL)
IDP Education Ltd, based in Melbourne, Australia, is a leading provider of international education services with a history of 50 years.
The company has a global presence with offices in over 30 countries.
IDP Education’s main business activities include management and administration of the IELTS test as a co-owner of IELTS, support for placements for study abroad, and management of language schools.
Andrew Barkla led the company since August 2015, but stepped down in September.
His tenure was notable for a sharp upswing in the stock that took it nearly 10X from the pre-IPO level around the time he took over.
His position has been assumed by Tennealle O’Shannessy, who previously led Adore Beauty.
How Do We Find ASX Tech Stocks To Buy?
Tech stocks in Australia are generally driven almost entirely by qualitative factors such as first mover advantage, quality and of their software and overall technology.
Quantitative factors such as profit, revenue and so forth generally take a back seat.
Even though it is imperative that their financials are sound, when it comes to tech stocks, we are buying the story and perceived future value.
However, the very nature of valuing companies through qualitative factors means that there is a lot of room for error, opinion and subjectivity.
This means that tech stocks tend to be small to medium cap, high risk and fairly speculative.
The hardest part when it comes to finding ASX tech stocks is the ability to process the information and factors at hand to make a good judgement call.
Our Research team specialises in this and has combed the ASX for some of the best tech stocks on the Australian market.