Insights

2 ASX tech shares that could be buys in September 2021

VanEck Video Gaming and Esports ETF is one ASX tech share to think about.
The post 2 ASX tech shares that could be buys in September 2021 appeared first on The Motley Fool Australia. –

There are a few ASX tech shares that could be long-term opportunities at the current prices.

It’s often businesses in the technology sector that are delivering new services or introducing a new way of doing things.

If a technology business can grow revenue quickly then that may come with good profit margins.

These two ASX tech shares could be good prospects for the long-term:

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This exchange-traded fund (ETF) is about businesses in the video gaming and e-sports sector, if you hadn’t already guessed from the name.

There are currently 26 names in the portfolio. These are the top ten positions at the moment: Nvidia, Advanced Micro Devices, Sea, Tencent, Unity Software, Activision Blizzard, Nintendo, Electronic Arts, Bandai Namco and Roblox Corp.

To qualify for the portfolio, businesses have to generate a “significant” portion – at least 50% – of revenue from the video gaming sector.

Holdings include video game and related hardware and software developers, streaming services, companies involved in e-sports events and so on.

E-sports, which now get very large digital crowds, has created multiple new revenue streams from game publisher fees, media rights, merchandise, ticket sales and advertising.

VanEck says that video gaming revenue has grown by an average of 12% per year since 2015. This is helping underlying profit grow too. VanEck says this industry could be a long-term growth story.

Redbubble Ltd (ASX: RBL)

Redbubble is currently rated as a buy by the broker Morgans.

This ASX tech shares sells products with artist designs on them such as wall art, clothing, stationery and phone cases.

Morgans is attracted to the long-term outlook for the business, though the short-term could be difficult. The broker thinks that the business can grow its earnings over the coming years.

Redbubble saw marketplace revenue increase by 58% to $553 million. This led to earnings before interest, tax, depreciation and amortisation (EBITDA) soaring 930% to $53 million. It also made $31 million of net profit after tax (NPAT), compared to a loss of $9 million in FY20. Operating cashflow was $55 million for the year, up from $47 million in FY20.

The number of unique customers rose 40% to 9.5 million, with 67% growth in purchases from repeat customers, contributing 42% of marketplace revenue. It had 44 fulfiller locations across the network, up from 41 at the end of FY20.

Over the next few years, Redbubble is aiming to reach $1.25 billion of marketplace revenue. The first half of FY22 is expected to show a decline of marketplace revenue because of a very strong prior corresponding period. But the second half is expected to show a return to growth.

In the medium-term, the ASX tech share is going to invest heavily for growth to drive an increase in users, orders and repeat buying.

Over the longer-term, the Redbubble EBITDA margin is expected to increase as its operating leverage strengthens.

The post 2 ASX tech shares that could be buys in September 2021 appeared first on The Motley Fool Australia.

Should you invest $1,000 in Redbubble right now?

Before you consider Redbubble, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Redbubble wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

These are the 10 most shorted ASX shares

2 ASX shares I like from reporting season: expert

3 reasons why the Redbubble (ASX:RBL) share price could be a buy
Why Ampol, NIB, Redbubble, & Sonic shares are dropping

3 excellent ASX ETFs for investors

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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