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HIGHLIGHTS
- Tech companies in the UK have seen a performance dip due to the high inflation rate.
- The prevailing lower valuation of tech stocks makes them good options for long-term investments as the sector has strong prospects for the future.
With constant innovations, technology companies in the UK have registered unprecedented growth. Rising demand has led to a boom in the tech industry, especially in the software-as-a-service (SaaS), fintech, e-commerce, and artificial intelligence (AI) sub-sectors. Almost every part of the economy is now backed by technology in some form or other, making it vital for a modern economy. This is also reflected in the fact that last year, the UK's tech sector received record investments worth £29.4 billion, according to data from the Digital Economy Council (DEC), the UK’s advisory committee of the independent members.
However, despite the huge prospects, the sector isn't unaffected by the current circumstances. As seen in the past, technology stocks tend to underperform when the inflation rate is high as borrowing becomes expensive, pushing the valuations down. The UK is presently witnessing decades-high inflation as the Russia-Ukraine war has pushed the prices of almost everything up amid supply chain disruptions.
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Tech stocks in the UK
The conflict has also impacted the stock markets, prompting a selloff in most sectors as investors look for less risky options. As a result, the tech stocks in the UK are seeing a sharp decline in performance.
While several stocks have witnessed a dip, investors have still saved high-growth tech stocks on their watchlists, keeping in mind the strong fundamentals and business prospects in the sector.
Additionally, the blue-chip FTSE 100 index does not have many tech stocks, but hundreds of mid and small-cap stocks are listed on the London Stock Exchange. This means that many of these stocks that have strong fundamentals and have delivered good returns in the past can be considered as they are likely to perform better than others during economic uncertainties.
Here's a look at some hot tech stocks that you may consider for the long term.
PensionBee Group Plc (LON: PBEE)
The UK-based fintech startup aims to simplify pension savings in the country. Romi Savova is the founder and chief executive of the company. In the first quarter ending 31 March 2022, the company reported strong year-on-year growth across all key performance indicators. Its planned marketing investments pushed the invested customer base by 70% to 138,000, while the registered customer base stood at nearly 800,000.
The company has a market capitalisation of £313.63 million. PensionBee's shares were trading at GBX 142.58 at 10:29 am GMT+1 on 27 April 2022.
Delivaroo (LON: ROO)
The online food delivery company operates in over two hundred cities across the UK, Europe, Asia, the Middle East, and Australia. William Shu is the co-founder and CEO of Deliveroo. It reported solid growth in Q1 2022, with its gross transaction value climbing 12% year-on-year and orders up by 18%.
Shares of Delivaroo were trading at GBX 101.60 on 27 April 2022, 11:45 am GMT+1. The market cap of the company currently stands at £1,808.97 million.
LendInvest PLC (LON:LINV)
LendInvest is a UK-based firm for property lending and investing. Ian Thomas is the Co-Founder & Chief Investment Officer of the company. For the year ended 31 March 2022, the company reported an 18% year-on-year increase in funds under management, which represents its committed and deployed capital.
The company was listed on the London Stock Exchange last year and has a market cap of £272.64 million as of 27 April 2022. Its shares stood at GBX 198.00 at 11:54 am GMT+1 on 27 April 2022.
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.
