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World-leading tech stocks are often associated with the likes of Silicon Valley, but there is a wider variety of technology companies in the UK than you might think. Discover the top 10 UK tech stocks to watch across the FTSE 100, FTSE 250 and alternative investment market (AIM).
Although UK technology stocks are often thought to have less value than those found in other major economies, such as the US or China, there are a huge range of tech companies in the UK that have great potential to lead the market.
There are a variety of different ways that traders can gain exposure to technology companies based in the UK, whether this is by focusing on an individual company or using a stock index to trade a range of different companies.
We’ve taken a look at an array of popular UK tech stocks across different markets within the London Stock Exchange (LSE). These tech stocks are not necessarily the biggest risers or largest by capitalisation, instead they are companies that have attracted significant market attention due to their volatile share prices.
Some of the most popular UK tech companies to watch are constituents of the FTSE 100 index, which tracks the performance of the top 100 companies on the LSE by market capitalisation. Tech stocks on the FTSE 100 range from software companies to online retailers, so there is a great range of opportunities on this index alone. Here are five of the most popular FTSE 100 technology stocks:
Just Eat plc (JE) is an online food and delivery service. The business acts as a middleman between the consumer and food outlets, which enables customers to search for local takeaways, pay online and choose their delivery method.
Just Eat listed on the LSE in 2014 at 240p per share, giving it a market capitalisation of £1.5 billion. It later joined the FTSE 100 in November 2017 after its share price reached £8, and its market valuation hit £5.4 billion – this increase of more than a third followed the company’s global expansion and a surge in sales.
Just Eat stock reached a high of £9.06 in February 2018 but saw a general decline throughout the remainder of 2018. However, in November 2018 there was a 7% surge in price, following the company’s third-quarter (Q3) earnings. This positivity has given markets confidence in Just Eat’s potential growth.
Micro Focus (MCRO) is a UK-based software and information technology company which provides consultancy and management software to a range of businesses worldwide. The company was listed on the LSE in 2005 and became a constituent of the FTSE 100 in 2014 after its market capitalisation grew following a series of acquisitions.
In 2017, Micro Focus was acquired by Hewlett Packard Enterprises, which caused a turbulent year for the software company as operational problems occurred during the merger. Shares of MCRO had been trading as low as £7.84 in March 2018, but had recovered significantly by November 2018, up to £15.69.
Ocado (OCDO) is a British online supermarket, which at first glance may not seem like a technology stock, but it is actually the parent company of one of the fastest growing tech companies in the UK. Ocado Technology is the company behind the Ocado.com platform, which also develops software for other large online retailers such as Morrisons, Fabled by Marie Claire, Fetch and Sizzle.
Although Ocado Technology is one of the driving forces behind the growth of Ocado, it is not the only contributor to its share price, so it is difficult to pinpoint its exact contribution.
The Sage Group (SGE), known as Sage, is a multinational software company that develops estimating and accounting software for small businesses, and has approximately 6.1 million customers worldwide. Sage was listed on the LSE in 1989 and was added to the FTSE 100 in 1999.
The company’s share price reached a high of £8.20 in late January 2018 but has experienced a downward trajectory ever since (as of 7 December 2018). Despite this, analysts have remained optimistic due to the news that the group’s organic revenue had climbed 6.8% in the year between September 2017 and September 2018.
The Vodafone Group (VOD) is a multinational telecommunications company that operates a mobile network across 25 countries and offers IT services in 150 countries.
Vodafone has a primary listing on the LSE and is a constituent of the FTSE 100. Vodafone even reached the top of the FTSE 100 (by market cap) after its shares jumped 7.8% on 13 November 2018. However, these gains were short lived as news of a Brexit deal led to concerns about the company’s revenue – three quarters of which is generated overseas.
The FTSE 250 index consists of the companies from 101 to the 350 on the list of the largest companies by market capitalisation on the LSE. Any large UK tech stocks to watch that aren’t on the FTSE 100, are likely to fall into this category. Two of the most popular technology stocks on the FTSE 250 include:
AVEVA Group (AVV) is a multinational information technology company, based in Cambridge. The business provides engineering and industrial software to other companies worldwide, helping to speed up processes and improve sustainability.
Between March 2018 and September 2018, shares of AVV increased by over 68% – from £17.92 up to £30.16. AVEVA stock gained a lot of attention from investors after the company completed its long-awaited merger with Schneider Electric. The company’s forecast for growth went up, and the management of AVEVA announced that it was happy with the progress made in terms of revenue growth, operating profit margins and recurring revenues.
Moneysupermarket.com Group (MONY) is a price comparison website that specialises in financial services – it aims to help consumers compare prices on a range of products, such as insurance, mortgages and credit cards.
Moneysupermarket announced that the company would be listed on the LSE in 2007, but the initial public offering (IPO) was disappointing, and shares were priced at just 170p – this meant the company was valued at £843 million rather than the £1 billion it had expected.
Since its IPO, shares of MONY have predominantly experienced upward momentum, reaching a high of 367p in January 2016. However, there are mixed forecasts for the future of Moneysupermarket.com. This is largely due to the significant drop in the share price in February 2018, following below expected quarterly earnings.
Emerging UK technology stocks might not have a market capitalisation that will take them into either the FTSE 100 or FTSE 250, but they could be included on other LSE indices, such as the alternative investment market (AIM) or the FTSE techmark all-share.
AIM was created to help smaller companies raise the capital needed to grow their businesses, and as such it is home to some of the UK’s most exciting emerging technology stocks.
Small-cap stocks tend to be popular among investors because there is the potential for market volatility and significant growth. Here are three of the most interesting emerging UK tech stocks to watch:
BATM Advanced Communications Ltd (BVC) is primarily focused on the development, production and marketing of data and telecommunication products, but it is also involved in the production of medical equipment. The company is a constituent of the FTSE techmark all-share index.
BATM has experienced an extended period of growth following the expansion of its networks and cyber division in 2017. This led to shares of BVC reaching a new 52-week high in November 2018, trading at 49p – this was an 81.68% increase in a six-month period.
The Blue Prism Group (PRSM) is a UK-based multinational software company that specialises in robotic process automation. The company aims to eliminate repetitive back-office jobs like manual data entry and processing work, which is one of the most anticipated trends in technology.
PRSM experienced a great pace of development in 2018, with over 145% revenue expansion in the first half (H1) of the year alone. The software company saw its share price rise from just 78p at the time of its IPO in early 2016, to a high of £26.08 in September 2018 – giving it a valuation of roughly £1.59 billion in October 2018. This valuation saw Blue Prism become the seventh largest company in the AIM.
PRSM’s share price did experience a decline after this peak in September 2018, as concerns rose that it was valued at 34 times its 2018 predicted sales but there is still optimism about the future of Blue Prism.
The GB Group (GBG) has quickly become a global leader in ID verification and fraud prevention software, providing its technology to top banks in China and Mexico. The company helps other firms make decisions about the customers they serve and their employees – including registering and verifying identities, fighting fraud and locating individuals.
GB Group’s net income remained the same between 2017 and 2018, but its revenue and gross profit were up. This gave markets confidence in GB Group and contributed to its share price trading at a high of £6.31 in September 2018. The company’s market valuation reached £889.93 million in October 2018, which solidified its place among the 25 largest AIM companies.
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