Sanitize your Portfolio; Time to look at Technology Stocks

  • Apr 27, 2020 AEST
  • Team Kalkine
Sanitize your Portfolio; Time to look at Technology Stocks

The cases of coronavirus are still on a rise on a global scale, leading to increasing fear among the investors about the long-term impact on their portfolio. The markets are highly volatile, and people are selling off their holdings out of anxiety.

If we look at the Australian benchmark index S&P/ASX 200 index, it can be noted that the index started moving in the downward direction from 21 February 2020 till 23 March 2020. The index which settled at 7162.50 on 20 February reached 4546 on 23 March 2020. From 24 March 2020, the index started showing improvement and moved in the upward direction. However, since 20 April 2020, the index again started moving in the downward trend, and there prevails an uncertainty in the market.

Within a span of ~ 30 days, we are in the bear market, and it is quite painful when you see your portfolio shrinking considerably.

In the present situation, no one can guarantee you time when the market would recover. But one thing is obvious that the situation would not be the same always, and things will come back on track. The only thing required during this period is to remain calm and positive. As the history teaches, investors have experienced similar situations in the past and have managed to deal with them, like the Financial crisis in 2008.

Points to remember while managing your funds: Steps during COVID-19

It is also true investors in the present scenario are worried about their investment. Every individual differs from the others and takes the situation either as a challenge or as an opportunity.

During this time, three points one should keep in mind while managing their funds:

  • Keep aside your emergency fund: In the present scenario, it is very important for people to keep adequate funds for 6 to 12 months to meet the daily expenses and sail through this tough time.
  • Relook at your present investment. In case of any possibility, try investing in equities to improve the overall asset allocation. When the market is bearish, the stocks are available at a lower price.
  • Plan your investment better when you are nearing to your financial commitments. In the present scenario, if your financial goal is due in a shorter time, it is possible that it might result in huge losses. In such cases, investors follow the strategy of de-risking their portfolio.

 

Do Read: Time to Sanitize and Build Immunity for your Equity Portfolio

In this article, we would discuss one such sector which is expected to improve the investor’s portfolio in the upcoming future. It is the technology sector, and we would look at few ASX listed Technology companies which would drive the Australian sector post COVID-19 crisis.

Points to note while looking at the Technology sector:

Nowadays when most of the businesses rely on technology sector to operate from the remote location, disruptive technology trend would continue to evolve. It would result in increased demand for cyber security solutions. The reason behind this is increasing threat of cyber-attack, educating on risk awareness as well as improved regulations.

As per AustCyber, Indo-Pacific nations have appeared as significant buyers of cybersecurity solutions. It can be considered as the market opportunity for Australian providers.

Apart from them, the countries like US police in Westport is testing Drone Technology that can detect when people have fever, for example drone technology is currently being used to detect any COVID-19 symptoms and identify social distancing.

Fintech is another sector which is expected to have a brighter future in the upcoming period.

Do Read: Fintech Future Is Promising, But The Journey May Not Be Hassle-Free

On that note, let us filter out few ASX listed Technology stocks engaged in cloud computing, cyber-security, Drone Technology, and financial technology and see how they have performed so far.

Xero Limited (ASX: XRO):

Xero Limited is the provider of online accounting software for small business. Xero is not only user friendly but strong cloud-based accounting system.

XRO shares have delivered a negative YTD return of 4.54%. However, in the past one month, the shares have provided the return of ~ 20.67%. As on 27 April 2020, the trading session ended at $79.67.

Recently, the company announced that it had delivered new technology updates for customers to access the Australian Taxation Office's new JobKeeper program.

Key Updates

  • The company is emerging as the global leader in the online accounting software that helps small firms and their advisors to get seamless workflows.
  • Xero has more than 2 million subscribers presently.
  • Core technology is cloud computing and there are various companies around the world that are switching to this technology to run various computing & storage assignments in a better, faster & more cost-effectively manner.

 

archTIS Limited (ASX: AR9)

A technology company, archTIS Limited is engaged in development and designing of products and services for safe information sharing. The Company which was established about 10 years ago in 2006 has experience in providing identity management services & secure information as well as solutions within Australian Government.

The shares of AR9 has delivered a negative YTD return of 38.46%. However, in the past one month, the shares have delivered a return of 77.78%. As on 27 April 2020, the day was settled at $0.060.

Recently, on 31 March 2020, archTIS’ Kojensi platform was selected by Commonwealth Ombudsman to enable a safer manner of conducting inspections & collaboration between agencies where security is of high importance.

The Commonwealth Ombudsman bought an initial 50 licenses of Kojensi and the agreement is for 12 months’ worth a minimum of $35,454 in annual recurring revenue along with 2 one-year extension.

Key Updates

During the lockdown period, where most of business work is taking place from the remote location, security of data is a big concern for various companies. Possibility of increase in the demand for the security of data in the near future is keeping the company on its toes.

archTIS’s Kojensi is not only secure but also a trusted platform which is widely used for document collaboration and file sharing. Entering into agreement for 12 months by Commonwealth Ombudsman shows the believe in the platform.

DroneShield Limited (ASX: DRO)

A global leader in the drone security technology DroneShield Limited, has developed pre-distinguished drone security solutions. These solutions help in shielding individuals, businesses as well as vital infrastructure of intervention from drones.

The shares of DRO has delivered a negative YTD of 66.04%. However, in the last one month, the shares have delivered negative return of 10%. By the end of the trading session on 27 April 2020, the shares settled at $0.89.

Recently, the company has shipped the rest of the DroneGun Middle Eastern Ministry of Defence order that was announced during June 2018.

Key Updates

Safety, security, and privacy are the top priorities of any nation. Droneshield manufacturing and supply chain capabilities have indeed ramped up during the current difficult times the world is going through as security and defence shall always stay key priorities for public and private sector customers.

 

 

Flexigroup Limited (ASX: FXL)

Flexigroup Limited offers its customers and businesses various financial solutions via its network of retail and business partners. It comprises of Buy Now Pay Later (BNPL) products, credit cards and consumer and business leasing.

FXL shares have delivered a return of -60.59%. However, in the past one month, the shares have provided a return of 77.11%. On 27 April 2020, Flexigroup settled the day at $0.715.

Recently, the company has provided an update on its response to COVID-19 and a trading update for the March 2020 quarter. The Company highlighted that it in the precent scenario, it has switched to reprioritise its work & direct resources towards controlling the issues because of the extraordinary economic disruption due to coronavirus.

Key Updates

  • FXL has a diverse and strong business model. Its product suite includes Buy Now Pay Later, credit cards and SME lending. Thus, it is able to serve a broad cross-section of the economy across various demographics.
  • FlexiGroup has a track record of providing strong performance & sailing through ambiguous economic periods
  • During 3Q FY2020 ended 31 March 2020, the company witnessed 11% growth in the in active customers to 1.89 million, 18% growth in transaction volume on continuing product as compared to the previous corresponding period.
  • BNPL segment is the rising sector in the Australian market and has brighter future. There are about 70% of Australian citizen who have accepted BNPL products. Experts in the market believe that this market would double by 2023.
  • Since the main product is online, the current scenario along with the mobile platforms being used are great supporters to maintain the balance between instore and online spend. The online transaction of humm saw a high of 285% on pcp, recorded in 3Q2020.

 


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