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Highlights
- ULS Technology recently inked a three-year panel management agreement with the Legal & General (L&G) Mortgage Club.
- Kromek Group inked a $1.6 million agreement with a US-based federal agency for its nuclear radiation detector.
Technology has been at the forefront of all developments across sectors. The macroeconomic crisis and the COVID-19 pandemic accelerated the integration of technology across various aspects of operations. Businesses across various sectors have realised the significance of staying upgraded with the latest technology solutions and tools that aid in effective operations and ensure security.
The UK has seen a huge inflow of technology companies that offer novel solutions to ease business processes. Some of these companies may be listed on the sub-market of the LSE. However, AIM tech shares can be more volatile than traditional companies and are often viewed as riskier investments than the established companies listed on the main market.
(Data source: Refinitiv)
Let us review in detail two AIM-listed tech stocks and explore their investment potential.
ULS Technology Plc (LON:ULS)
With a market cap of £48.52 million, ULS Technology is a provider of online B2B platforms for the financial intermediary and conveyancing markets.
In June, ULS Technology inked a three-year panel management agreement with the Legal & General (L&G) Mortgage Club. The contract will provide L&G Mortgage Club access to its subsidiary Econveyancers’ panel and access to DigitalMove and Rapid Remortgage features.
ULS Technology’s shares last traded at GBX 74.60, down slightly by 0.27% at the close of trade on Monday 27 September 2021. In the last one year, ULS Technology’s shares gave a return of 40.84% to shareholders.
In terms of the company’s financial strength, ULS Technology recorded net cash of more than £23 million as of 30 June 2021. Its Q1 revenue and gross margin was in accordance with the board’s expectations at £5.2 million and £2.1 million, respectively. The company’s eConveyancer-based completions and instructions rose by 43% and 58%, respectively, compared to Q1 FY21.
Kromek Group Plc (LON:KMK)
Kromek Group develops radiation detection solutions for the nuclear, security screening and medical sectors. Recently, it inked an agreement with a US-based federal agency for its nuclear radiation detector for $1.6 million. The company’s market cap currently stands at £69.53 million.
Kromek Group’s shares last traded at GBX 16.05, down slightly by 0.31% at the close of trade on Monday 27 September 2021. In the last one year, ULS Technology’s shares gave a return of 46.74% to shareholders.
Kromek’s cash and cash equivalents for the year ended 30 April 2021 stood at £15.6 million compared to £9.4 million as of 30 April 2020. Its revenue was £10.4 million in 2021 compared to £13.1 million in 2020, and its gross margin was 48.4% (2020: 47.3%).
Bottomline
Income investors are often drawn to AIM-listed tech stocks due to their high return prospects. Nevertheless, as the rules of the main market do not apply to these companies, they may be risker investment. Thus, investors must carefully evaluate all parameters prior to investing in these stocks.
