Altium is one of the ASX tech shares rated as buys.
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Brokers are always on the lookout for opportunities, including with leading ASX tech shares.
There are a few businesses in the technology space that are rated as buys that may be able to produce returns over time from here.
Some ASX tech shares have substantial growth plans and may be able to achieve growing profit margins in the coming years.
Here are two of them:
Altium Limited (ASX: ALU)
Altium is one of the world’s leading electronic PCB software businesses. It’s currently rated as a buy by the broker Citi.
The Altium share price has risen by around 54% over the last six months.
A couple of months ago, Altium announced that it had returned to double digit growth in the second half of FY21 when it delivered its FY21 result. The company also said that it has a positive outlook for FY22.
Altium revealed a number of growth metrics in FY21. It saw “strong” growth of annual recurring revenue (ARR) of 29%. Recurring revenue was 65% of the overall revenue, up from 59% in the previous year. The company said that there was strong growth in term-based licenses, which is a positive for future recurring revenue.
Second half continuing business revenue from the ASX tech share increased 16%. There was “strong” Altium 365 adoption with almost 13,000 monthly active users and over 6,000 monthly active accounts. Its overall subscription base rose by 7% to 54,394.
Two of the fastest areas of growth were Octopart and China. Octopart saw revenue growth of 42% to US$27 million, whilst second half Chinese revenue increased 47%.
Vehicles, machines and devices are becoming increasingly technological, with Altium being part of that process.
Altium is expecting its total revenue to increase another 16% to 20% in FY22, with ARR growth of 23% to 27%.
According to Citi, the Altium share price is valued at 69x FY23’s estimated earnings.
Kogan.com Ltd (ASX: KGN)
Kogan is a leading e-commerce ASX share, which is rated as a buy by the broker Credit Suisse. It has a price target of $13.88 on the business.
After some difficulties during FY21, the broker noted that the first quarter of FY22 continued to show that the business is growing quickly in size.
Kogan said that there was growth in its Kogan First memberships, an optimised inventory position, strong growth in Kogan Marketplace and Mighty Ape.
In the first three months of FY22, gross sales increased 23.2% quarter on quarter to 330.5 million. The gross profit also increased by 31.6% quarter on quarter.
Active customers grew 30.7% year on year to 3.35 million for Kogan.com, whilst Mighty Ape finished with 748,000 active customers at 30 September 2021.
The number of Kogan First members grew 171.1% year on year and 64.4% quarter on quarter to 197,000. The growth in customers and members could help profit growth in the future.
Kogan.com has also resolved previous inventory problems that the company had, whilst also closing a number of inefficient overflow warehouses. This reduction in inventory levels led to the ASX tech share “significantly” reducing its warehousing costs, delivering an average variable cost saving of $0.8 million per month in the first quarter of FY22 compared to the fourth quarter of FY21.
According to Credit Suisse, the Kogan share price is valued at 23x FY23’s estimated earnings.
Should you invest $1,000 in Altium right now?
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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Altium and Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.