Sectors: Technology

DTL is a $1.1bn IT business, which has been trading around $7 for most of 2023, Morgans recently downgraded the IT solutions company to a hold with the same $7 price target. We believe the company will be a benefactor of increased IT spending in areas such as IT services and cloud networking infrastructure over the years ahead. The stock looks good value, trading on a PE of 26.6x for 2024, plus an estimated 3.6% yield, with its outlook helped by its defensive government contracts.

WBT is a leading developer of advanced semiconductor memory technology, this $633mn stock has demonstrated huge volatility over the last 12 months, something which often accompanies plenty of optimism but no profits – the big question is how fast the company is burning cash, if this accelerates the stock could be retesting its long term $2 support with a very limited life span in the main index

The AI giant has dominated the press through much of 2023, in August, they reported revenue for the 2nd quarter of $US13.51bn, up 101% from a year ago and up 88% on the previous quarter, what’s not to like!

XRO reported extremely well in May, the market re-rated the stock up around +25% following the result, as the accounting platform illustrated good progress in balancing growth and profitability. At MM, we continue to like XRO, especially when compared to many of its sector peers, but we are likely to trim/sell our position if we see a break out to fresh 2023 highs.

Tech stocks traditionally don’t like rising interest rates, although, as the chart below illustrates, it’s not a perfect science. Over the last 12 months, the sector has roared ahead as a number of the mega-caps showed they could deliver earnings in a tough economic backdrop.  Plus, they’ve been anticipating “peak interest rates”, but the Fed’s recent hawkish commentary has raised questions about the timing of this view into Christmas and beyond.

ALU was also re-rated up ~25% after the software provider reported very strong results last month that highlighted the momentum building in their business. Their earnings were ahead of expectations for FY23, but more importantly, the composition of their earnings improved underpinning better guidance – another quality tech company delivering to shareholders that we have successfully owned in the past.