Money Talks is Stockhead’s regular drill down into the sectors and companies that investors have their eye on right now.
Today, we hear from John Athanasiou CEO of Red Leaf Securities.
“We’re bullish on tech”
Mention the ASX tech sector, and the buy now pay later (BPNL) and WAAAX stocks would instantly spring to mind.
And rightly so; these companies have risen exponentially in recent years. Afterpay (ASX:APT), for example, listed in 2016 at $1 but is now worth over $66, while accounting software stock Xero (ASX:XRO) listed in Australia at under $5 per share in 2012 and is now worth nearly $90.
Investors wanting growth may have little scope left in BNPLs or large caps generally.
But there are other potential winners to be found in the ASX’s tech sector, from virtual reality to cloud computing, that have grown substantially in recent years but have not got the recognition they deserve.
Red Leaf’s Athanasiou told Stockhead he is bullish on the tech sector.
“We still feel that it [tech] the hottest sector, we’d rather be in this than others because that’s where the momentum is,” he said.
Market Cap: ~$33m
The virtual reality company, which is primarily focused in Europe, has more than doubled in the last 12 months as it rolled out solutions for car buyers seeking to customise their cars before they buy.
Athanasiou told Stockhead he is watching this company closely and expects more good things to come from them.
“We’re very excited about [Vection],” he said.
“They’ve got a lot of support from the Italian government – they’re a shareholder.
“We see them as being profitable probably in a years time, they’re generating a decent amount of revenue.
“And in addition to that, from our understanding. they’re the only virtual reality listed company on the ASX and we just feel the market hasn’t caught onto it yet”.
Market Cap: ~$25m
Even before COVID-19, cyber security was tipped to be hot running sector with product sales predicted to surpass $183 billion in 2019.
And with people working from home due to the pandemic, online safety is even more of a concern for people and businesses.
While Vortiv is not the only cyber security stock on the ASX it is one of the few that is profitable and that’s why Athanasiou is a fan.
“And clearly given the recent events, and the [cyber security investment] announcement by the prime minister, cyber security is going to be one of the fastest growing sectors,” he says.
“It has potential to be the next BNPL sector in our opinion so we’re very bullish in that.”
Market Cap: ~$39m
The cloud software platform is up 43 per cent in 2020, even accounting for the February market crash.
It’s Annualised Recurring Revenue (ARR) at the end of the March quarter was $6.65 million, up 28 per cent on the prior quarter.
While Dropsuite’s last sales update was in late April, it said it expected increased demand for its software given the pandemic and consequential demand for cloud services essential for remote workplaces.
Athanasiou particularly noted its capabilities included backing up email.
“Given in this period everyone is working from home – we think it will excel. So in that space we’re excited,” he said.
John Athanasiou is the founder and CEO of Red Leaf Securities – a boutique broker based in Sydney that invests on behalf of high net worth clients and fund managers.
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The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead.
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Barry Stroman was a reporter for Zerg Watch, before becoming the lead editor. Barry has previously worked for Wired, MacWorld, PCWorld, and VentureBeat covering countless stories concerning all things related to tech and science. Barry studied at NYU.