Which tech stock is the best buy following today’s updates?

Which one of these two tech stocks is ripe for investment?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

These two technology companies have both released updates today, but which one is the better buy for Foolish investors?

Nanoco

Nanoco’s (LSE: NANO) full-year trading update has n’t been well-received by the market. Its shares have fallen by 8% today even though it states in the update that it remains confident of achieving progress in commercialising its technologies.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

However, Nanoco’s sales for the full year were £1.9m, which is down slightly on 2015’s figure of £2m. Furthermore, its net cash position has fallen to £14m from £18m at the end of January 2016, although all of these figures are in line with the company’s expectations.

The specialist in the development and manufacture of heavy metal-free quantum dots and semiconductor nanoparticles for use in lighting, displays and solar energy states in today’s update that it has made strong progress during the year. For example, it has moved to a non-exclusive licence agreement (from an exclusive one) with the Dow Chemical Co. This should allow it to open up additional routes into the display market and bodes well for its long-term future.

In terms of growth prospects, Nanoco is forecast to remain lossmaking in the current year but to move to profitability in the 2017 financial year. This indicates that investor sentiment could improve over the medium term and while it’s a relatively risky buy, Nanoco has the scope to rapidly rise off the back of further commercial progress with its technology.

Telit Communications

Also reporting today was Telit Communications (LSE: TCM). Unlike Nanoco, the market has reacted positively to its update, with its shares up by over 6% today. Its sales increased by 6.3% in the first six months of the current financial year, with its internet of things (IoT) sales rising by 23.4%.

This indicates that there’s significant potential for long-term growth within the IoT space, with Telit’s ability to provide integrated end-to-end IoT solutions for corporates and enterprises gaining strong traction. New client wins include SAP and Tech Mahindra, as well as John Deere.

Telit remains confident of its second-half performance and expects to report double-digit sales and profit growth for the full year. Its shares trade on a price-to-earnings growth (PEG) ratio of just 0.5, which indicates that they offer strong growth at a very reasonable price.

Of course, Telit’s cost base continues to rise at a faster pace than sales, with investment in R&D being relatively high. However, it’s targeting a reduction in operational expenses as a percentage of revenue of 8%-9% by 2018, which has the scope to boost margins and profitability.

As such, Telit seems to be a strong buy for less risk-averse, long-term investors. Its strong sales growth and the fact that it’s highly profitable make it less riskier than Nanoco, while a clear growth strategy and exposure to the fast-growing IoT space make Telit the better buy of the two companies at the present time.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Tired woman sleeping on London underground
Investing Articles

5 steps to monthly passive income streams of £500

Aiming for regular passive income streams, our writer walks through five key steps he would take.

Read more »

Business people shaking hands
Investing Articles

Director dealings: HSBC, National Grid, Taylor Wimpey

Director dealings can indicate whether a company's doing well. So, here are this week's director dealings from three of the…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 lesser-known stocks with 10% dividend yields!

With sky-high inflation, sizeable dividend yields can help my portfolio grow. These two stocks are paying 10% on average.

Read more »

Businessman pulling out wooden brick from toppling stack
Investing Articles

Is the Woodbois share price a bargain – or a value trap?

The Woodbois share price has seen big swings recently. Our writer considers why and explains his response.

Read more »

Electric cars charging in station
Investing Articles

Here’s why NIO stock is my top EV pick!

NIO stock had been one of the worst-performing shares over the last year, but it appears to have bottomed out.…

Read more »

Risk reward ratio / risk management concept
Investing Articles

The JD Wetherspoon share price has fallen 45% — should I load up?

The JD Wetherspoon share price has shed almost half its value in the past year. Should our writer buy another…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

Down 50%, is the Scottish Mortgage share price a bargain in plain sight?

The Scottish Mortgage share price has lost half its value in recent months. Is it now a bargain for our…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

A cheap UK share for the cybersecurity boom!

I'm backing this UK share after its share price collapsed this week. In fact, I've recently added this cybersecurity stock…

Read more »