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At this point, we are all aware that due to the adverse impact of the coronavirus pandemic, the respective performance of most of the sectors on the ASX has dropped significantly. A significant portion of stocks within these sectors have been trading near their 52 weeks low price.
However, on 13 March 2020, a sudden improvement was seen on the ASX where sectors started trading in the green, giving a sense that there is an upcoming bright sunny day post the brief sell-off. Nevertheless, one cannot be sure about the uncertainties surrounding the coronavirus outbreak.
One of the sectors that witnessed an improvement in its performance is the Information Technology sector, which, by the end of the trading session, zoomed 4.42% above its previous close and settled at 5,539.3 points. WAAAX stocks, which are the big players amongst the companies under the sector, also showed improvement in their share price with all of them ending the day in the green.
In this article, we would be covering four technology companies that can beat the impact of the COVID-19:
Altium Limited (ASX:ALU)
The shares of Altium Limited have generated a negative YTD return of 24.67%. However, the share price of the Company by market closure on 13 March 2020 improved by 4.368% to $27.00.
Altium Limited is a multination software Company that is engaged in electronics design systems for 3D PCB design & in the development of an embedded system.
Since the Company’s products are present in every corner of the world from the leading electronic design teams of the world to the grassroots electronic design community, one can consider that the Company has a bright future.
ALU has a unique range of technologies that help the businesses as well as design communities innovate, collaborate as well as create connected products.
Products (Source: Altium’s Website)
PCBs (Printed Circuit Boards) are considered as the heart of an intelligent system. Virtually, almost every electronic product is build using one or more PCBs. They are the carriers of all electronic parts, FPGAs, microchips, embedded software, and electromechanical parts. They also support as well as electrically connect components with the help of conductive tracks, pads and other features.
With a growth in the adoption rate of the internet of things (IoT) devices, there would also be an increase in the demand for PCBs. Thus, one can predict a bright future for companies like ALU that are engaged in PCB design software.
If we look at the results of the Company, in 1H FY2020 (period ended 31 December 2019), the revenue grew by 19% to US$92.8 million with robust performance in all the critical business units and regions apart from Octopart. ALU’s net PBT soared 23% to US$31.8 million and declared an interim dividend of 20 cps, up 25% on the previous corresponding period (pcp).
Also, the Company has provided its shareholders with increasing dividend amount over the last five financial years.
Appen Limited (ASX:APX)
Appen Limited is a provider of first-class human-annotated data required for machine learning (ML) as well as artificial intelligence (AI). The Company holds experience working in more than 130 nations and expertise in 180+ languages. It has more than 1 million trained contractors along with the industry’s most advanced AI-assisted data annotation platform that offers quality, security & pace expected by the leader’s technology, financial services, automotive, retail, manufacturing as well as govt globally.
Further, Appen has global coverage in countries like the UK, Australia, Philippines, China and the US.
The technology sector has a healthy outlook for 2020, and in the coming decade, AI is expected to pour in trillion of dollars on a global scale.
In FY2019 results (full year ended 31 December 2019), APX’s revenue was up 47% to $536 million, and underlying NPAT grew 32% to $64.7 million.
Further, the company has consistently provided its shareholders with a dividend.
Appen shares have delivered a negative YTD return of 22.72%. However, on 13 March 2020, the shares zoomed up by 6.884% and closed at $18.320.
Xero Limited (ASX:XRO)
Xero Limited provides online accounting software for small businesses. The Company’s accounting software offers secure online accounting software which enables the user to work from any location, share data with employees and work together with advisors. It also keeps accurate records. It can categorise the bank transactions once they flow into the software every day and track cash flow as prepares everything at tax time.
Users can also keep a watch on business health and helps to get paid at a faster pace.
Xero, in 1H FY2020 (period ended 30 September 2019) delivered a strong topline growth along with the improving gross margin and free cash flow. Its operating revenue soared by 32% to $338.7 million and declared a net profit of $1.3 million. Total subscribers grew by 30% to 2.057 million and the subscriber lifetime value went up by 37% to $5.4 billion.
XRO’s shares have delivered a negative YTD return of 6.62% and ~19% growth in the last six months. At the time of market close on 13 March 2020, the shares soared by 7.95% and settled at $80.390.
Cochlear Limited (ASX:COH)
Cochlear Limited is a health care technology company that is engaged in the manufacture and sale of Cochlear implant systems. Cochlear Limited is the leader in implantable hearing solutions enabling people of all ages to lead full & energetic lives.
As per the recent report released by the World Health Organisation on 01 March 2020, there are around 466 million people around the world with hearing loss. Amongst them, 34 million are children. It is projected by WHO that by 2050, more than 900 million individuals would be suffering from disabling hearing loss which might be due to genetic reason, birth difficulties, certain infectious disease, chronic ear infections, the usage of specific drugs, introduction to extreme noise, as well as ageing factors.
The data provided by the WHO indicates a considerable opportunity for companies such as COH in the future.
In 1H FY2020 for the six months ended 31 December 2019, Cochlear reported a growth of 9% in its sales revenue to $777.6 million. Cochlear implant revenue increased 14% and services by 9% while Acoustics revenue dropped by 9%.
The Company has consistently provided its shareholders with dividend since 2016.
COH shares have delivered a negative YTD return of 20.78% and performed outstandingly on ASX by the market close on 13 March 2020, where the shares zoomed up by ~21% and settled at $216.110. Around 784,026 shares were traded on the ASX during the day.
