Top 5 technology stocks for August 2021

Summary

  • UK’s technology sector raised a record high venture capital investment worth £15 billion after the US and China, as per Tech Nation.
  • The lifting of COVID-19 restrictions this month has added to a positive tech sector and economic outlook.
  • The tech sector witnessed growth despite a gloomy economic scenario as enterprises seek advanced technology solutions to speed up digital transformation and guarantee protection against cyber threats.

While the year 2020 has been rather tough due to economic and health related challenges as well as Brexit, the technology sector in the UK has demonstrated resilience in the form of continued investments as well as the creation of new employment opportunities.

According to the data published by Tech Nation, the technology sector raised a record high venture capital (VC) investment worth £15 billion in the world after the US and China, backed by rising investments technologies, such as blockchain, artificial intelligence, big data and quantum computing. Thus, proving the country to be an attractive tech investment ground.

The lifting of COVID-19 related restrictions this month is further anticipated to contribute to an overall positive tech sector and economic outlook. This demonstrates the rising importance of the tech sector in the country’s economic health. Below are 5 top technology stocks to watch out for in August 2021:

Cerillion Plc (LON: CER)

Shares of the telecom software solutions provider have a year-to-date return of 76.74 per cent as of 22 July 2021, with a market capitalisation of £215.45 million.

The ongoing COVID-19 pandemic continued to boost demand for remote working and online communication and collaboration tools in order to ensure proper communication among staff while ensuring their safety. In March 2021, Cerillion inked a 10-year long-term contract with Telesur, a telecommunications provider, for its new fully convergent BSS/OSS platform. Backed by major new contract procurements and scale of new implementations underway with existing as well as new clients, Cerillion’s revenues grew by 26% to £12.8 million for six-month period ended 31 March 2021, from £10.2 million previous year’s same period figures.

For six months ended 31 March 2021, pre-tax profit for Cerillion grew by 124% to £3.8 million as compared to £1.7 million in the first half of 2020. Net cash increased 60% to reach £7.7 million in H1 2021, as compared to £4.8 million for H1 2020.

dotDigital Group Plc (LON: DOTD)

The shares of the leading omni-channel marketing automation provider have given a year-to-date return of 56.25 per cent as of 22 July 2021, holding a market capitalisation of £722.94 million.

Despite challenging macroeconomic conditions, dotDigital continued to post double-digit organic revenue growth of 22% for the half year ended 31 December 2020 at £28.2 million, an increase from £23.1 million for the same six-month period in the previous year. The company is focusing on expanding in international markets due to the growing spending on the digital transformation of global businesses in order to endure the impact of the COVID-19 pandemic. It is focusing on building scalable partnerships and product innovation based on disruptive technologies such as data visualisation and artificial intelligence for growth in H2. dotDigital’s adjusted operating profit was £7.6 million in H1 2021, an increase of 9% from £7.0 million in H1 2020. The company also recorded healthy cash and cash equivalents at £27.6 million in H1 2021, up from £22.6 million in H1 2020.

Alfa Financial Software Holdings Plc (LON: ALFA)

The shares of the asset finance software provider have a year-to-date return of 7.61 per cent as of 22 July 2021, with a market capitalisation of £426.00 million.

Alfa Financial Software’s financial performance was in line with its expectations despite challenging societal and economic conditions. Continued product developments such as the launch of Version 5.6 that included a complete redesign with the addition of new features and technical innovations, the new ‘Mercury’ user interface that allows users to easily complete daily tasks and an upgrade to the Alfa POSkit, its component-based toolbox for building high agility Point of Sale applications, have been instrumental in drawing new and existing client contracts. It formed a 51:49 joint venture with Bitfount called Alfa iQ, to cater to a larger market.

Alfa Financial Software Holdings registered strong revenue growth to reach £78.9 million for the year ended 31 December 2020, an increase from the previous year’s £64.5 million, while its profit before tax grew from £13.0 million in 2019 to £23.2 million in 2020.

Kainos Group Plc (LON: KNOS)

 

The shares of FTSE 250 listed UK-based IT provider is active through two business divisions - Digital Services and Workday Practice. The stocks of the company have given a year-to-date return of 34.81 per cent as of 22 July 2021 with a market capitalisation of £1,928.65 million.

Employing over 2,000 people across 12 locations in Europe and North America, the company’s revenues grew year-on-year by 31 per cent from £178.8 million in 2020 to £234.7 million for the year ended 31 March 2021, while the company’s pre-tax profit increased 124 per cent to £57.1 million for the year ended 31 March 2021 against the previous year’s figures of £25.5 million. The company expects a strong financial performance in the coming few months as well, backed by strong demand from new and existing customers and the growing pace of digital transformation across key sectors. Kainos’ Digital Services division is expected from the UK government’s digital transformation programme and COVID-19 support services to NHS, while its Workday Practice division is expected to continue attracting new IT consulting contracts.

NCC Group PLC (LON: NCC)

The shares of FTSE 250 listed cybersecurity and risk mitigation service provider have a year-to-date return of 23.41 per cent as of 22 July 2021, with a market capitalisation of £912.97 million.

NCC Group’s revenues for the half year ended 30 November 2020 stood at £135.6 million, up by 2.2 per cent from £132.7 million in the previous year. The company’s profit before taxation increased by 18.9 per cent to £10.7 million in H1 2021 from £9.0 million in H1 2020. The hardships of the COVID-19 pandemic failed to dampen the robust demand for the company’s IT security services. The high demand for cybersecurity advisory services can be attributed to the rapid adoption of cloud technologies and rising cases of cyber threats, especially in a scenario when enterprises have allowed employees to work remotely from the safety of their homes. As clients continue to seek cybersecurity services, NCC is slated for an optimistic future growth. 

Comment


Disclaimer