Technology is on track to become the second-best performing sector on the market in FY19 as it rallied around 20% over the past year when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index gained a more modest 7%.
The strong showing is driven by the likes of the Afterpay Touch Group Ltd (ASX: APT) share price and WiseTech Global Ltd (ASX: WTC) share price which are up 170% and 75%, respectively.
Some believe many in the sector now fully or over-priced, but Bell Potter believes there are still gems to be found for those willing to do a little digging.
Re-rating candidate
To help you along, the broker has nominated the top three tech stocks to buy ahead of the August reporting season – and these are stocks that haven't been getting much attention from the market.
The first is Integrated Research Limited (ASX: IRI), which is Bell Potter's top pick following the software developer's record first half result in February and a strong quarterly trading update.
Despite this, the stock has only managed to record a gain of less than 2% over the past year but Bell Potter believes the stock will re-rate further at its full year results.
Bell Potter has a "buy" recommendation on the stock with a price target of $3.50 a share.
Buy the dip
The second stock on the list is Technology One Limited (ASX: TNE) after its share price took a beating last month on a poorly received half year result (its financial year end is September).
But the broker thinks the sell-off is overdone and describes the results as only being "slightly disappointing".
"But we are confident in a strong 2HFY19 result and, like last year, expect the stock to rally in the lead up to and following the full year result," said Bell Potter.
The broker has a "buy" recommendation on the stock with a $9 a share price target.
Sporting hero
Finally, Catapult Group International Ltd (ASX: CAT) is a new pick for the broker. Bell Potter believes there are a number of positive share price catalysts for the sports technology group.
The broker also believes Catapult will achieve its FY19 guidance, bring forward the positive free cash target by 6-12 months, appoint a new CEO and set FY20 guidance that shows strong growth in earnings before interest, tax, depreciation and amortisation (EBITDA).
Bell Potter has a "buy" rating on the stock with a $1.50 a share target price.
If you are hunting for other overachievers in FY20, the experts at the Motley Fool have a few more suggestions to put on your watchlist.
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