Today, we’ll look at the best ASX tech stocks to buy on the ASX in 2022 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.
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The Best ASX Tech Stocks to Buy in 2022
This is a curated list of what we believe are the 5 best ASX tech stocks to buy in 2022. 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.
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.
Nitro Software (ASX:NTO)
Nitro Software Limited (ASX:NTO) is a global leader in document productivity software and digital transformation.
Its offerings are relevant in a world that has pivoted to work-from-anywhere, anytime, and on any device.
The company’s Nitro Productivity Platform is a solution to legacy document procedures that are a handicap in such a dynamic environment.
Nitro is changing its revenue and product offerings models by transiting to SaaS-based offerings available off a productivity platform.
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.
Xero (ASX:XRO) is one of Australia and New Zealand’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 after consistent growth and due to strong sector tailwinds.
While the company is very highly valued, it is attractive for its growth prospects and heritage of innovation.
The pandemic has accelerated the growth of digitization and business processes, a trend that benefited Xero handsomely in recent years.
Freelancer Ltd (ASX:FLN) is an Australia-based online freelance portal with a worldwide reach.
The company, a pioneer of the gig economy has since morphed into the largest freelance portal by the number of users.
The company’s growth plateaued in the years leading up to the pandemic due to stiff competition from rivals such as Toptal, UpWork and Fiverr.
However, the pandemic was a shot in the arm for the company and revitalized its business due to the transition to online and remote work.
The company benefited from a massive rise in demand for popular gigs due to the acceleration of digitisation caused by the pandemic.
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.