Are ASX tech highflyers Pro Medicus, Technology One, Wisetech & Xero too high to buy?

I’ve included performance of each stock since the first Feature, as well as since the most recent (“M/R”) feature. My point here is not to say, “Well wasn’t I clever”, it’s to point out that for many of those 80-odd times these stocks made Feature, it probably looked to many an untrained eye as “Too high to buy”.

Also consider I have no idea what the performance from the most recent feature is going to be over the next 6 months. I can’t tell the future. It could be up 60% or down 60%, that’s not relevant to me. I just care that I am finding and taking advantage of opportunities that demonstrate the strongest trends.

It’s also why I have a strict risk management regime as well as an absolutely clinical methodology for exiting an investment (also technical analysis-based). I can’t predict the future, so I don’t worry about it. I just follow my investing plan. The rest takes care of itself.

Not expensive, cheap!

I’ll leave you with this thought and then we’ll move onto answering the question of whether there remains any share price upside in our quartet of ASX tech highflyers (I’ll do an up-to-date TA on each and we’ll also check out their latest Broker Consensus ratings and target prices – stay tuned!).

A rising share price isn’t necessarily a sign that a stock is expensive. I’d go so far as to argue that a strongly rising share price is more likely to indicate the stock in question is actually cheap.

I know, this is a bit of a brain bender. I’m suggesting that the exponential chart you’re baulking at buying might actually be cheap and not expensive. Even bendier, therefore, that the stock in question is more likely to be a BUY and not a SELL or AVOID?

This could be the paradigm shift in your investing thinking you’ve been waiting for!

Consider this: The reason why that share price is rising so strongly is because of the high conviction held by investors who are using their hard-earned cash to purchase its shares. They’ve done the research (we assume they are making rational decisions based upon all available information) and they’re buying today with the expectation of strong earnings growth down the track. They believe the fundamental outlook of the company will more than justify their current investment.

Basically, the “demand-side” as I call them, believe investing in this stock right now is the best decision they can make with their capital compared to all other alternatives. Dare I say, the demand-side thinks the stock is cheap, not expensive.

Now consider the “supply-side”, that is, those who already own shares in the company. They’re reluctant to sell those shares unless compensated by higher, and higher share prices. Why does this group of investors also so desperately want to own shares in this company?

For the same reason: They’ve also done their research, and they too agree investing in this stock right now is the best decision they can make with their capital compared to all other alternatives. Dare I say, the supply side thinks the stock is cheap, not expensive.

So, when we have a strongly rising share price trend, it tells us the demand-side thinks the stock is cheap and not expensive, and the supply-side thinks the stock is cheap and not expensive.

Perhaps then, the only person looking at the stock with the strongly rising share price who thinks it’s expensive is you? 🤔

This paradigm shift is perhaps the trigger you needed to help you start thinking more like the market!

Is Pro Medicus (PME) too high to buy?

Note that all broker ratings and targets are taken from broker research notes collected since July 1 (to keep them current).

To obtain a stock’s Broker Consensus Rating, we assign a value of +1 to any rating better than HOLD/NEUTRAL/MARKETWEIGHT, a value of 0 for any rating equivalent to HOLD/NEUTRAL/MARKETWEIGHT, and a value of -1 to any rating worse than HOLD/NEUTRAL/MARKETWEIGHT.

We then take the average of all assigned rating values and assign a Broker Consensus Rating of BUY to values greater than +0.5, a rating of HOLD for values between -0.5 and +0.5, and a rating of SELL for values less than -0.5.

PME’s broker consensus rating is +0.15, resulting in a Broker Consensus Rating of HOLD. Its consensus (average) target price is $157.18. This suggests brokers collectively believe the stock is around 31.7% overvalued based upon the closing price on Tuesday 26 November of $230.

Is Technology One (TNE) too high to buy?

TNE’s broker consensus rating is +0.18 (down from +0.45 prior to its FY24 results release on 19 November), resulting in a Broker Consensus Rating of HOLD. Its consensus (average) target price is $28.39 (up from $21.08 prior to its FY24 results). This suggests brokers collectively believe the stock is around 7.4% overvalued based upon the closing price on Tuesday 26 November of $30.65.

Is Wisetech Global (WTC) too high to buy?

WTC’s broker consensus rating is +0.79 (up from +0.64 prior to its 22 November trading update), resulting in a Broker Consensus Rating of BUY. Its consensus (average) target price is $127.84 (up from $117.69 prior to its 22 November trading update). This suggests brokers collectively believe the stock is around 2.8% undervalued based upon the closing price on Tuesday 26 November of $124.40.

Is Xero (XRO) too high to buy?