Apple's Stock Market Value Tops $2 Trillion- Which FTSE 100 Tech Stock Can Lead the UK Market?

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Apple's Stock Market Value Tops $2 Trillion- Which FTSE 100 Tech Stock Can Lead the UK Market?

 Apple's Stock Market Value Tops $2 Trillion- Which FTSE 100 Tech Stock Can Lead the UK Market?

Summary

  • Apple became the first listed company in the United States to break the $2 trillion barrier
  • Technology stocks have been relatively resilient during the pandemic and have outperformed the broader index
  • AVV, AVST, and SGE have delivered double-digit gains in the last three-month period

Wednesday, 19 August 2020 was a big day for Apple Inc, as it reached a $2 trillion milestone in terms of market capitalisation. In addition, it became the first listed company in the United States to break the $2 trillion barrier. The company recorded growth across its product lines, from iPhones to services.

Apple Inc (NASDAQ: AAPL), on 30 July 2020, released results for the third quarter ended 27 June 2020. The revenue for the quarter was US$59.7 billion, a growth of 11 per cent as compared to the previous corresponding period. International sales contributed 60 per cent of the quarter’s revenue. June quarter results were driven by double-digit growth in both Products and Services, along with the growth in all geographic segments. The Company posted a growth of 18 per cent in its EPS. It generated operating cash flows of US$16.3 billion during the June quarter. Also, the board declared a dividend of US$0.82 per share. Since 23 March 2020, when most of the countries imposed lockdown, Apple shares have generated a price return of more than 105 per cent.

Do read: Apple Announces 4 for 1 Stock Split, Posts Record Quarter Despite Pandemic Disruptions

Big tech companies such as Facebook, Google, Apple, Netflix, Amazon, Microsoft, and many more have been in business from quite a long time. Moreover, they have been swaying the Nasdaq composite index with their impressive business performances. These big firms with their innovative services have become an integral part of our lives in the contemporary world. Moreover, with the onslaught of the novel coronavirus, the reliance on the services of these tech companies has gone up manifolds.

These big tech firms benefit from innovation in their products & services, which increases the value of their brand. As the world looks up to a sustainable recovery, innovation-led by technology companies is most likely to drive the change towards a better future.

During the peak of the unprecedented crisis, the technology sector remained least impacted by the deadly virus. Instead, it empowered the services sector to keep moving ahead and protect the UK’s economy to a great extent. People were encouraged by their employers to work remotely. Britons relied heavily on online shopping for their groceries and essentials.

It is obvious that the technology stocks have been relatively resilient during the pandemic, we are going to review three FTSE 100 listed technology stocks - AVEVA Group Plc (LON: AVV), Avast Plc (LON:AVST), and Sage Group Plc (LON: SGE) and learn how they have been navigating through the unprecedented crisis. All these stocks have shown remarkable gains in the last three-month period.

Do read: Two Technology Stocks Trending on LSE: Bango Plc & MelodyVR Group Plc

The London’s broader equity benchmark index, FTSE 100 or Footsie on Thursday (20 August 2020 before the market close at 14:37 PM GMT+1), 6,020.56, down by 1.50 per cent. Footsie plummeted by nearly 30 per cent during the peak of the coronavirus pandemic (March). Since then, FTSE 100 has recovered by nearly 22 per cent. The index has been consistently maintaining a level of more than 6,000. Like the FTSE 100 index, the blue-chip companies also seem to be recovering gradually from the catastrophe caused by the coronavirus pandemic.

  • Aveva Group Plc

Aveva Group is £6.92 billion market-cap company that is engaged in providing engineering, design, and information management software in three geographical segments; the Asia Pacific, Americas, and Europe, Middle East, and Africa (EMEA). The outstanding market capitalisation of the group ranks it among the large caps listed and traded stock on the main market of the London Stock Exchange.

In the first quarter of 2021 period, the Company continued to deliver robust growth in recurring revenue, with 30 per cent growth in Subscription revenue. The Maintenance revenue remained flat, and revenue from Perpetual licences and Services declined significantly, due to the disruption caused by a coronavirus and the transition to a subscription business model. The Company experienced strong demand for software despite disruption related to Covid-19.

Aveva won multiple orders in varied markets such as life sciences, water, power generation, food, marine and oil & gas. The Company’s order pipeline for the remaining financial year is strong, driven by large contract renewals. Overall, the Company has shown solid performance in the first quarter of the financial year 2021, with robust Subscription revenue. The company is looking firm for a good showing in 2021.

Marker Capitalisation (£ million)

6,928.87

52 weeks High (GBX)

5,315

52 weeks Low (GBX)

2,846

Price Change (%) - 3 Months

10.30%

(Source: London Stock Exchange)

  • Avast Plc

Avast Plc is the world’s biggest cybersecurity company, which uses advanced technologies against cyber-attacks. The company has developed a scalable cloud-based security structure that can oversee everything that happens on the internet.

The Company has a high cash generative business model and organic revenue for 2020, which is expected to be ahead of set guidance. In the first half of 2020, the Group’s adjusted billings increased by 2.1 per cent year-on-year to US$469.1 million, with organic growth of 9.2 per cent year-on-year. Avast passed the milestone of 13 million paying customers, during the first half of 2020. The company’s business is resilient, strongly cash-generative, and has significant capacity to harness new growth opportunities in the long term.

Marker Capitalisation (£ million)

5,494.87

52 weeks High (GBX)

600.00

52 weeks Low (GBX)

270.60

Price Change (%) - 3 Months

11.90%

(Source: London Stock Exchange)

  • Sage Group Plc

The Company expects its recurring revenue to show growth in between 7-8 per cent, while organic operating margin is expected to increase by 22 per cent in 2020. The company’s businesses have witnessed the minimal impact of the coronavirus pandemic. FTSE 100 listed tech company would continue to invest in Cloud computing solutions.

Driven by a software subscription growth of 22.6 per cent to £885 million, the recurring revenue for the nine months ending 30 June 2020 surged by 9 per cent to £1,247 million. The Group’s total organic revenue saw an increase of 4.1 per cent to £1,395 million in the first nine months ending 30 June 2020 with a 1.1 per cent increase in revenue for the third quarter of 2020 to £460 million (Q3 2019: £455 million).

The provider of integrated accounting, payroll and payments solutions, Sage Group Plc is headquartered in Newcastle upon Tyne, the United Kingdom. Its bookkeeping arrangements are Sage One, Sage X3 and Sage Live; its instalments arrangements are Sage Payments and Sage Pay; and its finance arrangements are Sage One Payroll, Sage X3 People and Sage 50 Payroll.

Marker Capitalisation (£ million)

8,066.27

52 weeks High (GBX)

794.60

52 weeks Low (GBX)

534.80

Price Change (%) - 3 Months

12.30%

(Source: London Stock Exchange)

Do read: Two Technology Stocks Focusing on Customer Growth - Bigblu Broadband Plc & CloudCall Group Plc

Comparative chart: AVV, AVST & SGE vs FTSE100

(Source: Refinitiv, Thomson Reuters)

As evident from the graph, all the above-discussed technology stocks (AVV, AVST, and SGE) have outperformed the benchmark, the FTSE 100 index in the last three months. In addition, all these stocks have delivered double-digit growth in the past three-month period. Technology stocks have proved to be the cream of the crop the recent times. However, these companies operate in multiple geographies, and profits can be impacted negatively due to exchange rate fluctuations or any other external factors. The nature of business demands innovation and system maintenance and, any failure to do so could also impact the earnings of these companies.

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