As a fellow growth investor, I'm very bullish on WAAAX stocks. The outstanding performances from these companies during February earning season has far outshone the ASX.
As well as delivering impressive short-term returns, these tech companies have demonstrated the ability to unlock new revenue sources via aggressive growth strategies.
These are my ASX tech share picks, along with the lavish returns you'd have enjoyed if you were brave enough to invest in the January dip.
- Afterpay Touch Group Ltd (ASX: APT) rose 42.6% YTD for a $20.9 close yesterday.
- WiseTech Global Ltd (ASX: WTC) grew 24.8% YTD and closed at $21.52.
Why Afterpay?
Afterpay is the most popular buy-now pay-later financial product in the Australian market. It grants users the ability to pay for purchases over four instalments interest-free, charging fees only to consumers who pay late.
Its users are die-hard fans. Afterpay offers a sticky product with 90% of transactions on the platform come from repeat customers, supported by cultish brand loyalty. The company has had huge success in the US, with high-profile brands such as Revolve, Urban Outfitters and Kylie Cosmetics jumping on board. Active US users are on track for 1 million by the second half of the year and 2 thousand merchants by March end. Afterpay will also launch in the UK in the latter half of the year.
It also released impressive HY results. Revenue was up 91% to 116.1 million, merchants and active users doubled over the year. Based on forecasted price-to-earnings for 2021, investors would be willing to pay $174 for every $1 of Afterpay profit. In my view, the best time to buy Afterpay shares is now.
Why WiseTech?
WiseTech offers an end-to-end software solution for the logistics industry. Its flagship product, CargoWise One, enables seamless interaction between users in the freight chain. It is used by over 8 thousand businesses in 130 countries.
Similar to Afterpay, WiseTech's product is sticky with little to no criticism of the underlying business. It boasted a 99% recurring revenue rate and a sub 1% customer attrition rate. The company has adopted an aggressive acquisition strategy to expand its global foothold while retaining a strong cash position.
WiseTech's HY earnings call wasn't as ground-breaking as Afterpay's, but revenue still soared 68% to $156.7 million and projections were upgraded. Compared to their peers, WiseTech looks very expensive with its 139x multiple.
Foolish Takeaway
Both companies are a growth investor's treasure.
I'm bullish on both companies due to the ability to grow global market share on the back of impressive product metrics. Afterpay and WiseTech have achieved incredible growth to date and I have no doubt that there's only going up from here.
