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Despite wobbles in the sector this week, tech is clearly still in vogue among investors, writes expert Tim Knapton of ASX tech stock tracker TechVoyage

In the September quarter TechVoyage’s index of almost 500 ASX and NZX listed stocks rose by 3 per cent.

Over the last 12 months, our index is up 12 per cent compared with a gain of 8 per cent in the All Ordinaries index.

In just the last three months 11 tech stocks more than doubled. More than 100 rose by 20 per cent or more.

In other words more than one in five tech stocks were strongly re-rated.

The strongest sectors were communications tech, clean tech and, as almost always, our favourite in terms of secular growth prospects — software.

While most of the biggest gainers were micro caps there was no shortage of mid caps undergoing a re-rating.

More importantly, a growing proportion of the high flyers were running on fundamentals, which echoes the theme we’ve been postulating for a while: “SHOW ME THE MONEY!”

The best performing stock of all was ClearVue (ASX:CPV) which is developing products in the Building-Integrated Photovoltaics sector.

To be more precise it has proprietary IP to disperse infra-red natural light to the edges of glass building components for the generation of electricity.

Not far behind though was mid cap Hutchison Telecom (ASX:HTA), dramatically re-rated by the merger of its Vodafone Australia subsidiary with TPG.

It was a merger of equals in terms of enterprise value that creates a mobile and broadband giant with more than $6 billion in revenue, a much bigger platform to fund future growth.

Vault Intelligence (ASX:VLT) reported 76 per cent growth in annual contract revenue for its health and safety risk management software for last financial year.

The company also flagged strong demand growth for its Vault 3 Enterprise and Vault Sole Lone Worker products in the current financial year.

Connexion Media (ASX:CXZ) won a contract to design and deliver a system to automate General Motors’ courtesy transport programme with 4300 dealers in the US.

Connexion’s apps allow remote tracking and analysis of vehicle fleets by mobile or computer.

Neo-lender Wisr (ASX:WZR) — formerly DirectMoney — is still in the early stages of revenue traction. But, as further evidence of the changing financial services landscape, it more than quintupled its loan origination volumes last financial year.

Keytone Dairy’s (ASX:KTD) rally reflects two macro phenomena – the surge in Chinese demand for Australian dairy products and the continued explosion of Chinese e commerce activity.

Keytone now has wet or dry milk products listed on Alibaba’s T mall, JD.com and Pinduoduo.

Its products are also stocked by a major chain of Shanghai food malls.

Etherstack (ASX:ESK) was another micro cap to show the market the money by transitioning into positive EBITDA earnings last financial year.

The company also reported 32 per cent growth in recurrent revenues from its mission critical radio technologies.

Mid caps that registered strong gains in the quarter included cargo logistics software provider Wisetech, pay-now pay later transactions enabler AfterPay Touch, gaming hardware and software provider, Ainsworth Game Technology and broadband provider TPG Telecom.

So you can guess the conclusion — it’s time to shift away from hi-tech concept stocks into those that are delivering impressive financials.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.