Yes, the top performer was a speculator, but there were plenty of technology businesses doing great work justifying their stock price surge
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Last year was a wild ride for ASX technology shares.
Sure, the S&P/ASX All Technology Index (ASX: XTX) was up a gentle 3.72% for 2021. But along the way it was also 15% down (in May) and more than 12% up (in November).
Aside from teaching us to hold our shares through the ups and downs, this showed the jitters the markets had about rising inflation and interest rates.
The theory is that rising interest rates impact tech stocks more than other sectors, because many of these companies rely on future earnings to justify their valuations.
But some ASX tech shares managed to ride out the volatility and put broad smiles on the faces of their investors.
Here are the 5 best performers of 2021 out of the constituents of the ASX All Tech index:
2021 share price gain
Novonix Ltd (ASX: NVX)
Life360 Inc (ASX: 360)
Praemium Ltd (ASX: PPS)
WiseTech Global Ltd (ASX: WTC)
Readytech Holdings Ltd (ASX: RDY)
This ASX tech share is up 660% despite no profit, not much revenue
Battery materials and technology provider Novonix Ltd (ASX: NVX) sure did attract a lot of speculators last year.
Its shares rocketed up a phenomenal 660% over 2021, as investors piled on to take advantage of the electrification of the car industry. It was by far the biggest gainer among the ASX All Tech members.
This is despite Novonix not even making much revenue, let alone profit.
The business has much potential, but the team at Marcus Today wrote last week that they wouldn’t buy in at this stage.
“The near-term picture doesn’t offer that much of a compelling reason to get involved,” the team stated.
“Demand for its products are expected to gain momentum but until there are more cash flows, it is hard to value.”
These shares are still cheap, despite 157% gain in 2021
Family tracking software maker Life360 Inc (ASX: 360) started off 2021 with a bang, announcing in January that early Meta Platforms Inc (NASDAQ: FB) staffer and sister to the chief executive, Randi Zuckerberg, had joined the board.
Wilson Asset Management portfolio manager Tobias Yao bought in at that time, when the shares were around $3.80.
“Given her profile, and the amount of opportunities that would come across her desk, we thought it was a huge vote of confidence that she decided to choose Life360.”
The stock closed 2021 at $9.71 after starting the year at $3.77, which is an impressive 157% gain.
Yao told a Wilson video that Life360 shares are still good value.
“The valuation is actually undemanding relative to many of its international peers,” he said.
“We think the share price still has material upside driven by continued top-line growth — as well as multiple expansion on the back of people getting more comfortable with the growth story.”
Boom ASX share set for more gains if interest rates rise
Financial planning software maker Praemium Ltd (ASX: PPS) was the only other stock in the ASX All Tech index that more than doubled its value over 2021.
The stock closed the year at $1.47, which ended up being a 123% return for 2021.
Shaw and Partners portfolio manager James Gerrish said last month that he would be happy to buy into Praemium in the $1.30s.
“To me, the independent platform businesses have got such tailwinds around how investors are holding their assets,” he said in a Market Matters video.
“And the huge uplift in the value of investable assets over time.”
Investor software is seen as an inflation beneficiary, as they hold balances of uninvested funds from their users, which they can lend out to banks for the cash rate.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc., Meta Platforms, Inc., Praemium Limited, Readytech Holdings Ltd, and WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. The Motley Fool Australia has recommended Meta Platforms, Inc., Praemium Limited, and Readytech Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.