Money Talks: This expert likes Aussie tech stocks that can compete on the global stage
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Money Talks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to see what’s hot, their top picks and what they’re looking out for.
Today, we hear from Gregg Taylor, chief investment officer and portfolio manager at Bombora Group.
When it comes to tech stocks, Bombora looks for those that have globally competitive intellectual property (IP) — and therefore have global opportunities for growth.
IP is the legal ownership of an idea — aka patents, copyrights, trademarks, and trade secrets.
“Our view is that, in the tech space, it’s a global economy,” Taylor says.
“So these businesses need to have clear monetisation opportunities on a global scale.
“Everyone says they are going to the US, or are going to take on the world, but not many companies succeed at it.”
Bombora favours software businesses, among other things. Specifically, Bombora looks for high revenues from software that is embedded into customer ecosystems.
“This means they can demand a higher price for a product because it is critical to a client’s day-to-day operations,” Taylor says.
“As a result of that, you have a high repeatable income stream and very low customer churn.”
Pacific Knowledge Systems (ASX:PKS)
Market Cap: $22.5m
“PKS created software that automates pathology testing in labs, and things like patient alerts and reports in hospitals,” Taylor says.
“We like this business because it hasn’t lost a customer in the seven years since this technology was commercialised.
“Once it is embedded the customer becomes very reliant on the technology, and it’s very difficult for PKS to be removed or replaced because they are the leading technology partner [in the space].
“This is an Australian business that is now going global through a partnership with one of the world’s largest healthcare technology distributors called Abbott Labs (NYSE:ABT), a $US150 billion ($218.4 billion) US-based business.
“We like putting growth capital into businesses that have exciting opportunities like this.
“The pipeline of global opportunities that PKS has via Abbott could increase the size of this business many times over.”
UltraServe (planning an ASX listing)
“It’s important that [retail] websites are up and functional, running 100 per cent of the time, especially during peak periods,” Taylor says.
“Some [online betting agencies] had problems on Melbourne Cup day, for example, which means they were in shutdown on potentially their biggest revenue day of the year.
“The same analogue works with global retailers.
“Payments platform developer UltraServe is now a leading player in offering this service.
“We invested in this company in the last 12 months. In the next six months it is planning an ASX listing to deploy capital for ongoing growth into global markets.
“Already, more than 80 per cent of revenues for UltraServe are from outside of Australia.”
Gregg has 20 years of international business experience in financial markets, technology, sports administration, media and retail.
Aside from is role at Bombora, Gregg serves on the Board of Acrow Formwork and Construction Services (ASX:ACF) and on the Board of Cronulla Sharks Rugby League Football Club and Cronulla Sharks Leagues Club.