Top 3 tech stocks to watch in July 2020

We take a look at some of the most attractive tech stocks to keep an eye on throughout July.

Ocado shares surge as online sales rise amid lockdown

From September 2020, Ocado will end its 20-year partnership with Waitrose and enter a new relationship with Marks & Spencer, after the retailer acquired half of its grocery business in a deal valued at around £750 million.

Covid-19 has made online demand for groceries skyrocket, with the new joint venture with M&S capable of reaping major rewards for both parties if executed correctly and able pushing Ocado’s stock higher in the fourth quarter of 2020 to become one of the UK’s top tech stocks.

Outside of Ocado’s joint venture deal with M&S and, arguably the key driver of its share price gains in 2020, is its digital grocery platform which it licenses several leading supermarkets from around the world, assisting them with their online sales, storage and distribution. This includes Morrisons in the UK, Groupe Casino in France, ICA in Sweden, Coles in Australia, Kroger in the US, Sobeys in Canada and Aeon in Japan.

Although it is still early days for Ocado’s tech business. The company still generates three times more revenue from its online grocery operation than its tech division, and it’s still loss-making overall. Despite this, Ocado is becoming a vital partner for major retailers looking to automate and digitise their businesses and has plenty of room to grow considering its tech can be used by more industries than just groceries.

The growth potential of its tech platform has helped the company exceed nearly all analysts expectations, with the stock up 60% year-to-date. Ocado closed at £20 per share on Friday.

Avast shares set to soar higher in 2020

After the FTSE 100 reshuffle, Czech-based software company Avast has joined the blue-chip index, with a market cap of £4.7 billion.

Avast is one of the world’s largest cybersecurity firms, with more than 435 million users that rely on the company’s malware, anti-virus, firewall and anti-hacking tool kits to keep their data safe.

Earlier this year, the company unveiled its first quarter results, which showed that the business had actually benefitted from government-imposed lockdowns that have forced people to work from home – allowing the business to leave its full-year guidance unchanged.

Despite this, the stock tumbled 38% at the height of the Covid-19 crisis, but the company’s share price has climbed 68% since hitting a low of 270p per share and could continue to trade higher in 2020 due to its strong growth outlook.

Avast closed at 538p per share on Friday, with the stock up 13% year-to-date.

Spotify shares surge as company hits $50 billion market cap

Spotify has seen its share price double in value over the last three months, with the company on course hitting a $50 billion market cap after unveilling new plans to monetise podcasts and test in-app offers.

Since the beginning of April, where the stock was trading at $121 a share, the music streaming service has seen its share price soar more than 100%.

Since announcing back in May that the comedian Joe Rogan will migrate his popular podcast ‘The Joe Rogan Experience’ to Spotify’s platform from 1 September and become exclusive to the music streaming service later this year its share price has soared.

Another bit of news that is exciting investors is Spotify’s testing of a new interactive ad format for podcasts on its platform.

Instead of listeners having to remember a promo code mentioned within the podcast itself, Spotify’s new in-app feature will display offers that consumers can simply click on to redeem.

‘The average podcast listener has heard a countless number of ads ending with promo codes or show-specific websites, carefully repeated three times so as not to forget it,’ Joel Withrow, senior product manager of Podcast Monetisation at Spotify, said in a statement.

‘In-app offers makes it vastly simpler for listeners to redeem deals whenever they come back to the app, and we can all benefit from one fewer ‘w-w-w-dot’ spelling lesson from our favourite podcast creators.’

Spotify is trading at $271.49 per share at the time of publication.

How to trade tech stocks with IG

Looking to trade Ocado and other tech stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Ocado’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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