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Date : 08/11/2022

Two Leading ASX Tech Stocks to Buy in October 2022

With the NASDAQ Composite Index dropping by 31.73% year-to-date, here’s why ASX tech stocks investors should not be alarmed. When NASDAQ drops, there should be opportunities to buy certain index companies that have the potential to increase in value. The same is true in the ASX market.

According to the Export Council of Australia, technology is our nation’s fourth-largest export sector and is forecasted to grow from AU$8 in 2018 to AU$19 billion by 2030. So despite price increases and a strong US dollar, investors remain optimistic about technology with its key role in providing solutions to significant issues including renewable energy, automation, and healthcare. 

The growth of the Australian tech sector is also reflected in asx tech stock market valuations. Between June 2019 and June 2021, the market capitalisation of the ASX information technology index grew by over 120%. 

Join us as our award-winning team of Research Analysts take a closer look at two leading ASX tech stocks to buy in october 2022 that have been performing on the ASX.

Weebit Nano Limited (ASX: WBT)

The absence of investors from a company doesn’t always imply that it will continue to lose money. In fact, if a good company is offered at a fair price, investors will buy it. 

Nevertheless, part of the risk mitigation is identifying if the company simply burns cash and is bound to crash. For Weebit Nano, should its tech stocks ASX shareholders be worried about the company’s cash burn rate? 

The company’s cash burn is just around 5.1% of its AU$434 million market capitalisation. It would probably be easy for the business to finance another year’s expansion by issuing some new ASX tech stocks to investors or even by taking out a loan. After all, Weebit has consistently hit their milestones, filed several patents, and validated its product concept. Following an equity raise, the firm is also optimally positioned to keep progressing.

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Weebit Nano Limited Has Been Under Our Watchful Eye for More Than Two Years

In September 2020, we recommended a Buy while Weebit’s share price was at $0.82, expecting the company to announce commercial agreements with manufacturers and distributors. At this time, Weebit has successfully raised a total of $12.2 million and it was funded for future commercialisation activities. 

By October 2020, we recommended members with long-term strategies to Half Sell. The surges in stock price at that time resulted from the market realising the potential the technology has. However, it still has a long way to go in order to begin commercialisation. 

From December 2022 until today, we’ve watched Weebit, analysed its performance, and upgraded to a high-conviction Buy as one of the best tech stocks ASX there is, given its revolutionary chips that are on the verge of production.

Altium Limited (ASX: ALU)

Altium Limited (ASX: ALU)

The growth of electronic devices, rising profitability, and strong balance sheet and cash flow are some of the reasons why Altium remains to be a good stock to invest in.

Altium’s stock price may be down 15% in 2022, but it was significantly lower earlier this year and was down by 40%. Since that low point, the company’s stock has increased by about 50%. 

Altium’s ASX 200 tech stocks have continued to experience strong growth since the announcement of its FY22 results, which showed revenue growth of 23% to US$220.8 million and EPS growth of 57% to US 42.2 cents. Taking advantage of the global shortage of computer parts, investors propelled Altium shares upward last month after the company increased its dividend and outperformed forecasts for its earnings margin.

In FY23, Altium projects a 15% to 20% rise in revenue, bringing it to between US$255 million and US$265 million. The management’s outlook is still fairly optimistic, and it is still on track to double FY 2022 revenue to $500 million by 2026.

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Shares in Value Kept Track of Altium Limited’s ASX Tech Stock Performance

Shares in Value closely monitored Altium Limited’s ASX tech stocks since September 2020. At that time, we saw the company as a growing business with favourable long-term macro conditions. It came with good financial health and solid past performance, thus we recommended our members to buy Altium tech stocks on ASX.

On June 9, 2021, we recommended our members to Sell and book profits after Altium Limited received a formal, non-binding, indicative, and unsolicited takeover offer from Autodesk. Autodesk (NASDAQ: ADSK) is one of the biggest American software companies with a market cap of over $62 billion. The acquisition offer represented a 27% return since our buy recommendation on Altium in less than 4 months. The takeover offer for 100% of Altium was $38.50 a share.

After a year, momentum has returned to Altium’s business, and we recommended a ‘Buy’ as one of the best tech stocks ASX last July 2022. Back then, we believed that the offer on the table represented a fair value for Altium. However, Altium rejected the bid, and Autodesk did not make a revised offer – suggesting it was a fair offer that Altium had rejected. In August 2022, Altium’s business was once again on the ascendency. There is a strong growth runway ahead, and we retained a ‘Buy’ recommendation.

Understanding that the ASX tech stock market is highly volatile, our team of award-winning research analysts keeps a careful eye on premium stocks and provides timely recommendations based on current circumstances and data-driven projections.


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