10 FTSE tech stocks to look at in August 2021

Summary

• COVID-19 pandemic has quickened the pace of adoption of advanced technologies for the digital transformation of various enterprises.
• The high demand enabled the technology sector to endure the impact of gloomy economic conditions during the pandemic.
• Lifting of restrictions from mid-July as well as an increasing number of people returning to office presents a positive outlook for the technology sector in the UK for the coming months.

The COVID-19 pandemic has reinforced and quickened the pace of adoption of new and advanced technologies to speed up digital transformation across various enterprises. Enterprises allowing employees to work from home and access confidential company information through unprotected networks has driven the need for tech solutions that not only facilitate remote working but also secure company assets and data.

The UK government has also been funding various tech initiatives aimed at enhancing technology solution uptake as well as encourage smaller companies that would be finding it difficult to sustain the difficult economic conditions. However, unlike other sectors, the technology sector was less affected by the pandemic, as demand for digital transformation continued to grow.

Lifting of restrictions from mid-July as well as people returning to office is projected to drive demand for advanced technology solutions in the coming years, as people realise their benefits. Here we take a look at 10 FTSE technology stocks for August 2021. These tech stocks are not necessarily the largest by market capitalisation or market share but are instead companies that have been selected based on the strong year-to-date (YTD) stock returns and hold robust growth potential.

                                       Copyright © 2021 Kalkine Media

1. Zoo Digital Group Plc (LON:ZOO)

Zoo Digital Group Plc is a provider of a complete range of cloud-based media and localisation for the global entertainment industry. The company’s services and solutions portfolio supports major Hollywood studios and streaming services to help them globalise their content for audiences across various languages and streaming platforms.

During the COVID-19 pandemic, ZOO catered to the rising needs for content among stay-at-home audiences and continued to deliver strong growth throughout the period of significant disruption in the wider entertainment industry. Cloud software enabled ZOO to continue offering secure and uninterrupted services to audiences during the global pandemic.

The company’s revenues rose by 33 per cent to reach $39.5 million for the year ended 31 March 2021, as compared to $29.8 million in 2020. Adjusted EBITDA increased by 112 per cent to $4.5 million.

ZOO Digital Group stock, with a market capitalisation of £109.04 million, has given a year-to-date (YTD) return of 115.69 per cent to its shareholders as of 26 July 2021.

2. Altitude Group Plc (LON: ALT)

A Manchester-based operator of a global marketplace for the promotional products industry, in its trading update for the April-June quarter (Q1) of the current financial year, reported the group’s positive trade and current business performance, which was in line with expectations. Despite a tumultuous industry performance in Q4 of the year ended 31 March 2021, the trading outlook remained healthy and annual revenue is slated to be around £7.4 million, and gross profit is expected to be around £5.2 million.

The continued recovery since the initial impact of the pandemic progressed into the first quarter of Q1 2021 and the purchase order value exceeded the previous year. The group managed to maintain a robust cash balance of £1.4 million as of 30 June 2021.

Altitude Group stock, with a market capitalisation of £21.20 million, has given a year-to-date (YTD) return of 100.64 per cent to its shareholders as of 26 July 2021.

3. Essensys Plc (LON:ESYS)

Essensys Plc is a provider of on-demand cloud services and mission critical software-as-a-service (SaaS) platforms for the workspace-as-a-service or coworking industry. The company’s SaaS platforms – Operate and Connect - help clients overcome complex operational challenges and lower costs by easing routine management tasks of workspaces. It also provides on-demand IT, infrastructure and technology enterprise-class services.

On 8 July 2021, the company announced a proposed Open Offer of approximately £2.0 million that would enable qualifying shareholders to subscribe for an aggregate of 701,755 shares. It plans to use the funds raised to take advantage of the opportunities presented by the growing flexible workspace industry through its innovative product development and go-to-market strategy. The company aims to expand its product reach through its newly launched FLEX services platform. Essensys’ revenue for the half year ended 31 January 2021 stood at £10.6 million.

Essensys stock, with a market capitalisation of £158.23 million, has given a year-to-date (YTD) return of 100.25 per cent to its shareholders as of 26 July 2021.

4. GRC International Group Plc (LON:GRC)

GRC International Group Plc is listed on London Stock Exchange's AIM market. It is a provider of a complete suite of products and services required to address risk management, IT governance, compliance requirements across in line with cybersecurity and data protection regulations. The company operates via Consultancy, Training, and Publishing and Distribution divisions.

During the H2 of FY21 (12-months ended 31 March 2021), the group registered significant performance improvements across all business areas in terms of strong billings, which was up by 20 per cent to £6.7 million in H2 FY21 as compared to £5.6 million in H1 FY21. The H2 FY21 performance improvement was mainly due to rising demand and activity during February and March 2021. Per business day, billings rose from £51,000 in Q3 to £60,000 in Q4. In March 2021, website traffic was the highest since July 2018 and overall website traffic and transactions increased by 12 per cent and 13 per cent respectively in the month, as compared to February 2021, which helped generate positive EBITDA and positive cash flow for the quarter. 

GRC International Group stock, with a market capitalisation of £44.97 million, has given a year-to-date (YTD) return of 91.07 per cent to its shareholders as of 26 July 2021.

5. Blackbird Plc (LON: BIRD)

A developer and seller of the Blackbird® - the patented cloud native video editing platform, operates in the SaaS and cloud video market. Due to its cloud-native characteristic, Blackbird® eliminates the requirement for expensive, high-end workstations and can be used from anywhere on any device. It enables complete visibility on multi-location digital content, enhances time to market for live content such as video clips, thereby offering an attractive and effective means of monetisation.

For the year ended 31 December 2020, the company recorded year-on-year revenue growth of 45 per cent, to £1.56 million from £1.07 million in 2019. On 6 July 2021, Blackbird entered into a multi-year agreement with Univision to drive large-scale video production efficiencies across digital and streaming and operations. On 15 July 2021, Blackbird was selected by Athletes Unlimited to drive flexible, efficient and fast cloud native video workflows.

On 19 July 2021, Blackbird received clearance from the regulator Finra, to begin cross-trading on the OTCQX Best Market in order to increase availability to investors in North America.

Blackbird stock, with a market capitalisation of £120.06 million, has given a year-to-date (YTD) return of 88.45 per cent to its shareholders as of 26 July 2021.

6. Cerillion Plc (LON: CER) 

Established in 1999 and headquartered in London, Cerillion is a provider of end-to-end billing, charging and CRM software solutions for the telecommunications, finance and utility sectors. The company’s solutions are currently used by 90 customers in 44 countries.

For the six-month period ended on 31 March 2021, new orders of the company rose by 148 per cent to £23.6 million, from £9.5 million in the same period in 2020. This includes its record contract deal with Telesur, a leading telecommunications provider in Latin America, for $18.4 million, which came just in time in March 2021. The company’s revenues increased by 26 per cent to reach £12.8 million for six months ended 31 March 2021 as compared to the previous year’s £10.2 million, which mirrors the scale of implementations currently underway due to the signing of new major contracts.

Cerillion stock, with a market capitalisation of £224.30 million, has given a year-to-date (YTD) return of 87.00 per cent to its shareholders as of 26 July 2021.

7. PCI-PAL Plc (LON: PCIP)

PCI-PAL is a provider of cloud-based secure payment solutions for business communications. The company is listed on the FTSE AIM All-Share Index (AIM) and is engaged in providing secure SaaS solutions for global companies. 

Post a strong year of trading, PCI Pal’s revenues were up by a whopping 66 per cent to reach £7.3 million for the year ended 30 June 2021, as compared to £4.4 million in 2021. The year-on-year growth in revenues was driven by the increase in aggregate Total Annual Contract Value contracts signed to date.  The company’s new customer contracts signed during the period increased to 195 new contracts as compared to 100 in 2020.

PCI-PAL stock, with a market capitalisation of £59.76 million, has given a year-to-date (YTD) return of 83.10 per cent to its shareholders as of 26 July 2021.

8. K3 Business Technology Group Plc (LON:KBT)

K3 Business Technology Group Plc is a provider of mission-critical software and cloud solutions and is engaged in offering software solutions to over 3,000 customers globally. It is an integrated business systems supplier to distributors, manufacturers and retailers.

For the six months ended on 31 May 2021, the revenue of the Salford-headquartered company stood at £23.2 million compared to £23.1 million in 2020. The company’s half yearly results were in line with management expectations. The gross margin decreased to 56.2 per cent from the previous year’s 60.4 per cent due to the disruptions caused by the pandemic on third-party products' customer base, which comprises smaller distributors and retailers. On the back of its strong product portfolio as well as talented pool, the company expects to build on its own-IP sales aims at generating long-term, high-margin recurring income in the second half of the year.

K3 Business Technology Group stock, with a market capitalisation of £94.39 million, has given a year-to-date (YTD) return of 78.32 per cent to its shareholders as of 26 July 2021.

9. Vianet Group Plc (LON:VNET)

A provider of business to business (b2b) connected solutions was listed on London’s AIM in 2006. The company is engaged in offering actionable data and business insights through devices connected to its Internet of Things platform (IoT).

Strong customer, employee and supplier engagement strategies during the pandemic has enabled the group to leverage from the heightened demand for data insights, remote asset management and contactless solutions, and the company anticipates high profits for H2 2022. Its Smart Zones division is on the road to recovery as 90 per cent of UK’s pubs re-opened by the end of June. This is expected to drive a return to full billing and increase demand for retail data insight services. In contrast its Smart Machines division is benefiting from the growing demand for of contactless payments and remote connections to unattended retail assets.

Vianet Group stock, with a market cap of £30.55 million, has given a year-to-date (YTD) return of 69.21 per cent to its shareholders as of 26 July 2021.

10. Eleco Plc (LON:ELCO)

Eleco Plc is a construction software specialist engaged in catering to the needs of players operating in engineering, architectural, and construction industries in the UK, Germany, Sweden, Netherlands and the US. The company offers project management, timber engineering, CAD and visualisation, cloud-based digital marketing and asset and facility management solutions under Elecosoft.

The year ended 31 December 2020 recorded a 12 per cent year-on-year growth in profit before tax, thus demonstrating the company’s resilience to the period of economic uncertainty. The company’s revenues stood at £25.2 million in line with the previous year’s £25.4 million. It improved net cash position to £6.2 million for the period ended 31 December 2020 from 2019’s £1.1 million, which positions the company strongly in the segment. The company announced furlough repayments of £98,000 from the total £150,000.

Eleco stock, with a market capitalisation of £109.70 million, has given a year-to-date (YTD) return of 62.20 per cent to its shareholders as of 26 July 2021.