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Highlights:
- The technology sector consisting of gadget makers, software developers, etc., has gained prominence as we move towards a technology-inclusive world.
- The Bank of England is projected to raise the interest rates to control inflation, which makes borrowing expensive, and the cash flows of tech firms are discounted.
Technology stocks are often considered one of the hottest stocks by investors. The technology sector consisting of gadget makers, software developers, etc., has gained prominence as we move towards a technology-inclusive world. With inflation rising in the current market, investors tend to expand their portfolios with stocks that showcase good growth potential. However, one must understand the risks of the market before placing their bets on stocks.
With the Bank of England projected to raise interest rates to control inflation, the rising rates make borrowing expensive. As a result, the cash flows of tech firms are discounted, leading to a decline in their value. Besides, another crucial thing to remember is that there are many technology firms in the growth phase. Therefore, they prefer spending on growth rather than on dividends.
Image source: Freedomz, Shutterstock.com
Amid the current economic headwinds, investors looking for tech stocks can explore the below options.
Sage Group Plc (LON: SGE)
The North Tyneside-based multinational company is in the business of making enterprise software. It belongs to UK's blue-chip index FTSE 100. At present, it enjoys a market cap of £8,090.66 million, and its EPS stands at 0.28. The stock value has depreciated by nearly 2% over the past 12 months as of 15 December 2022. In the previous trading session, the stock closed at GBX 793.80.
Computacenter Plc (LON: CCC)
The British multinational is an independent technology partner and provides computer services to organisations. With a market capitalisation of £2,505.29 million, the CCC stock has fallen over 25% in the past year, while the EPS stands at 1.64 as of 15 December 2022. Computacenter's last close was at GBX 2,002.00 on Wednesday.
Micro Focus International plc (LON: MCRO)
The FTSE 250 constituent is an IT business offering software and consultancy. As of 15 December 2022, the stock has a market cap of £1,769.66 million. It has given investors a decent return of 54.60% over the past year. The stock's last close was at GBX 523.20.
Darktrace Plc (LON: DARK)
The British-American IT firm specialises in cyber security. The firm is listed on the FTSE 250 index and has a market cap of £2,185.45 million as of 15 December 2022. Its stock price has tumbled over 22% over the past 12 months. DARK's previous close was at GBX 292.10 on Wednesday.
Kin and Carta Plc (LON: KCT)
The digital transformation consultancy boasts a market cap of £421.67 million, which is listed on the FTSE All-Share index. Its one-year return stands at -19.73% and the EPS is at 0.06 as of 15 December 2022. The stock's previous close was at GBX 236.00 on Wednesday.
Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
