Home / News / Top ASX tech picks for October

Almost every industry in the world has improved itself by using technology. It makes the process more efficient and usually more profitable.

Plenty of the best performing businesses come from the technology sector. I think the next two ASX tech shares could be good ones to consider:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay has been one of my preferred ideas for a while now, and I believe it continues to have good prospects.

The business processes billions of dollars of electronic donations for large and medium US churches. It’s a very valuable service, particularly in this era of COVID-19 with social distancing and increased technology adoption.

Pushpay also owns a business called Church Community Builder which offers plenty of church management tools. It has a combined offered called ChurchStaq, which is proving to be very popular.

Pushpay is steadily winning more clients and increasing its usage at existing clients. It isn’t seeing an unwinding of donations digitally through its systems as COVID-19 restrictions unwind.

The ASX tech share is now aiming for 25% of the Catholic segment over the next few years. That can diversify and seemingly increase Pushpay’s earnings.

In FY21 it saw its EBITDAF margin (EBITDA explained – the F stands for foreign cy) increased from 22% to 34%. That level of increase shows Pushpay can become even more profitable as it adds more processing volume.

The latest Pushpay share price is valued at 30 times the estimated earnings for the 2023 financial year.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This is a technology-focused exchange-traded fund (ETF). As you’ve probably guessed, it’s about the global video gaming and e-sports sector.

I really like this industry because it’s generally profitable, defensive and has good long-term tailwinds.

Lots of people like playing games. The number of gamers and e-sports viewers is still steadily rising, particularly in places like Asia and Africa. That’s one of the main reasons why I like this ASX tech share – the global growth trend.

There are various new avenues to make profit in video gaming, thanks to e-sports. The big events get the same sort of viewing audiences as the Olympics and soccer World Cup. I think there could be some strong advertising revenue growth over time.

Looking at the portfolio, it has a total of 26 positions. There aren’t many listed businesses that generate a significant portion of revenue from video gaming.

These are some of the biggest holdings: Nvidia, Advanced Micro Devices, Tencent, Activision Blizzard, Nintendo, Electronic Arts and Bandai Namco.

Summary thoughts on ASX tech shares

I believe that technology businesses have the capability of producing outsized returns if they are growing revenue and increasing profit margins.

Pushpay could produce better returns over the next five years if if successfully expands outside of its current client base. However, I like the diversified nature of the ESPO ETF and the underlying growth there.

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