NANO, NET, ALFA: FTSE tech stocks in focus amid rising inflation, interest rates

July 12, 2022 01:09 PM BST | By Rishika Raina
 NANO, NET, ALFA: FTSE tech stocks in focus amid rising inflation, interest rates
Image source: TippaPatt, Shutterstock

Highlights

  • US tech giant Apple has recently inaugurated a store on Regent Street in London.
  • Generally, high inflation levels create strong headwinds for a lot of tech firms while decreasing their pricing power.
  • The interest rate hikes to counter the rising inflation also impact the performance of tech stocks.

Amid the rising inflationary pressure across the globe, US tech giant Apple, which has a market cap of over US$2trillion, recently inaugurated a store on Regent Street in London. Even though Apple is a quality growth stock, which has shown resilience during recent times, not all tech stocks are enjoying the same luck.

Generally, high inflation levels tend to create strong headwinds for a lot of tech firms. Rising inflation and interest rates can often affect different tech stocks in diverse ways. Currently, inflationary pressures are creating supply chain issues across the world. Rising labour costs have also created staff shortfalls, further impacting the tech businesses.

                                                         ©2022 Kalkine Media®

The operating and gross margins of the tech firms that don’t have adequate pricing power to forward the rising costs to consumers are bound to contract. The interest rate hikes to counter the rising inflation also impact the performance of tech stocks. With rising rates, it becomes tough for high-growth tech firms to borrow more and focus on business expansion.

Tech companies aren’t typically valued on the basis of short-term profits but on the basis of their future free cash flow (FCF) growth. Rising interest rates thus decrease the firm’s earnings estimates in the long run while impacting their valuations. Additionally, with the rising interest rates, the investors are incentivised to shift their money from the tech sector to the high-yield bond market.

Despite all these concerns, investors may not have to avoid tech stocks altogether. Let’s look at 3 FTSE tech stocks that UK investors can consider buying amid the ongoing inflationary situation. 

Nanoco Group Plc (LON: NANO)

Tech business Nanoco Group plc comes with a market cap of £110.27m as of 12 July. On Tuesday, the shares of the company were witnessing a surge and was up by 2.92% at around 12:30 PM (GMT+1) and was trading at GBX 35.20. The company has performed significantly well over the last 12 months. Both the one-year returns and YTD have given its investors returns of 61.04% and 75.82%, respectively. However, its EPS lies in the negative territory, at 0.01. 

Netcall Plc (LON:NET)

Netcall Plc is a software specialist focused on enhancing consumer experience on 12 July was trading at GBX 88.00 and was witnessing a fall by 4.35% by at 12:40 PM (GMT+1). Netcall had a market cap of £138.02m with both one-year and YTD returns giving investors return of 21.59% and 27.75%, respectively. Its EPS also lies in the positive territory, at 0.01.

Alfa Financial Software Holdings plc (LON: ALFA)

Alfa Financial Software Holdings plc is a market-leading software firm and deals in the asset financing sector. With a market cap of £458.46m as of 12 July, the shares of the company were trading at GBX 153.50 at 12:45 PM (GMT+1). Even though the company has given investors a positive return of 4.78% as of 12 July, its YTD return lies in the negative territory at -19.00%. 

Note: The above content constitutes a very preliminary observation or view based on market 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.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Limited, Company No. 12643132 (Kalkine Media, we or us) and is available for personal and non-commercial use only. Kalkine Media is an appointed representative of Kalkine Limited, who is authorized and regulated by the FCA (FRN: 579414). The non-personalised advice given by Kalkine Media through its Content does not in any way endorse or recommend individuals, investment products or services suitable for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a qualified financial planner and/or adviser. No liability is accepted by Kalkine Media or Kalkine Limited and/or any of its employees/officers, for any investment loss, or any other loss or detriment experienced by you for any investment decision, whether consequent to, or in any way related to this Content, the provision of which is a regulated activity. Kalkine Media does not intend to exclude any liability which is not permitted to be excluded under applicable law or regulation. Some of the Content on this website may be sponsored/non-sponsored, as applicable. However, on the date of publication of any such Content, none of the employees and/or associates of Kalkine Media hold positions in any of the stocks covered by Kalkine Media through its Content. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music/video that may be used in the Content are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music or video used in the Content unless stated otherwise. The images/music/video that may be used in the Content are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.


Sponsored Articles


Investing Ideas

Previous Next