5 Best ASX Tech Stocks To Buy [Australian tech ASX]

Tech Stocks to Buy

Henry Fung

Henry is a co-founder of MF & Co. Asset Management with over 19 years of experience as a trader, investor and asset manager. Henry is the instructor of the Professional Trading Course, which is a free 5-day course on how to become a profitable trader.

March 18, 2024

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Today, we’ll look at what we think are the best ASX tech stocks to buy.

Some of these ASX technology stocks tend to be in there infancy and there is a lot of upside built into the share price.

The technology space is where the growth is – this is because there can be an infinite amount of ideas that can be turned into profitable enterprises by providing new ideas such as AI, and providing efficiencies and solutions to existing problems.

With interest rates now pretty much at the top of the cycle with the next phase likely to be for rates to come down, tech stocks are in a much more favourable position than when we saw rates rising last year.

The Best ASX Tech Stocks to Buy

This is a curated list of what we believe are the 5 best ASX tech stocks to buy. These companies all have an exciting, scalable product and a great business plan with strong upside potential.

However, the list of viable or strong Australian tech stocks is not long.

The reason is that Australia does not foster a strong tax, investment, or regulatory environment which tech companies need to thrive.

We saw that with companies such as Atlassian listing in the US instead because that’s where they can access the most money.

Atlassian would not be who they are today without the huge funding and customer base of the US market.

Until Australia provides a sort of environment that helps Australian tech companies grow, the US market is still the best place to go to for tech opportunities.

This is why we have a big focus on trading high-growth tech companies in the US where there is plenty of funding and encouragement to take risks and grow a tech business from scratch.

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If you want to know how we pick US stocks and trade their short-term potential, join our 5-day trading course where we’ll teach you how to find opportunities. 

You’ll also get free US trade alerts after the course.

Having said that, Australia does have some pretty exciting stocks. In our view, these companies represent the best of what the Australian technology sector has to offer.

Xero (ASX:XRO)

Xero (ASX:XRO)

Even through the rough macro environment since 2022, the company managed to grow reasonably well owing to the product’s non-discretionary nature and the company’s favorable unit economics.

With the double engine of pandemic-induced digitization and technology pervasiveness that AI will drive, Xero is poised to take advantage of a massive global SME opportunity.

The company has gotten its act together with its restructuring efforts which are showing strong operational efficiency just a year in and has concentrated its future strategy on core segments which enjoys a NZ$76B TAM.

Recent developments and future opportunities paint a very strong picture for Xero.

Read the research on how Xero (ASX:XRO) made our best ASX tech stocks to buy list.

Pro Medicus (ASX:PME)

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.

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Pro Medicus’ revolutionary technology allows the easy sharing of huge datasets and brings scale to radiology diagnostics.

Read the research on how Pro Medicus (ASX:PME) made our best ASX tech stocks to buy list. 

PEXA Group (ASX:PXA)

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.

Read the full article on why PEXA Group (ASX:PXA) is one of the best Australian tech ASX stocks to buy.

PointsBet Holdings (ASX:PBH)

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.

Read the full article on why PointsBet Holdings (ASX:PBH) is one of the best Australian tech ASX stocks to buy.

IDP Education (ASX:IEL)

IDP Education Limited (ASX:IEL)

IDP Education Ltd, based in Melbourne, Australia, is a leading provider of international education services with a history of 50 years.

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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.

Read the research on how IDP Education (ASX:IEL) made our best ASX tech stocks to buy list.

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.

Are you looking for more stocks to buy? In our opinion, buying the right stock at the right time is just half the battle – knowing how to manage the position and risk is just as, if not more important. Take our free 5-day trade like a professional course, it give you the foundational knowledge required to become a profitable trader.

This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.

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