Here’s why i think Altium Limited (ASX: ALU) and this outstanding ASX tech share could be great long term options…
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Despite its recent wobbles, the tech sector has once again been one of the best places to invest your money in 2020.
Since its launch in February, the S&P/ASX All Technology Index (ASX: XTX) has gained approximately 20%. As a comparison, over the same period, the S&P/ASX 200 Index (ASX: XJO) has lost 15% of its value.
The good news is that due to the quality on offer in the sector, I believe a certain level of outperformance can continue for many years to come.
In light of this, I feel it could be worth considering a buy and hold investment in the sector today. But which ASX tech shares should you buy? Two I would recommend you consider buying are as follows:
Altium Limited (ASX: ALU)
The first ASX tech share to consider buying is Altium. It is the printed circuit board (PCB) design software provider behind the popular Altium Designer platform. This award-winning platform is used by almost 50,000 users to connect with every facet of the PCB design process.
Although FY 2020 was a difficult year because of the disruption caused by the pandemic, I believe it is well worth looking beyond this and focusing on the future. This is because Altium’s future looks increasingly positive due to its exposure to favourable industry tailwinds such as artificial intelligence, 5G internet, and the Internet of Things. These markets are supporting the rise of connected devices globally, which should underpin strong demand for electronic design software over the next decade.
Xero Limited (ASX: XRO)
Another outstanding ASX tech share to consider buying is Xero. It is a cloud-based accounting software company which has been growing its customer base at a rapid rate over the last few years. At the end of FY 2020, Xero’s total subscriber numbers were up 26% on the prior year to 2.285 million subscribers. Combined with an increase in average revenue per user, the company reported a 30% increase in operating revenue to NZ$718.2 million.
Pleasingly, due to the company’s sizeable market opportunity and the ongoing shift to the cloud, I believe it still has a very long runway for growth. In light of this, I think it could be a great buy and hold option for investors.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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