2 exciting tech stocks to consider for your ISA this year

Edward Sheldon looks at two UK-listed tech stocks that could make excellent ISA holdings.

| 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.

ISA deadline season is upon us and today I’m looking at two exciting technology stocks that may appeal to those seeking capital growth within their ISA share portfolios.


Provider of online gaming and financial trading software Playtech (LSE: PTEC) has enjoyed phenomenal growth in recent years, with revenue increasing from €208m five years ago to €709m last year, a compound annual growth rate (CAGR) of 28%.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

And recent results were excellent, with revenues climbing another 12%, or 20% on a constant currency basis, and adjusted EBITDA increasing 20%, or 32% at constant currency. Key customers such as William Hill, Paddy Power Betfair and Betfred all recently renewed their contracts, and with nine out of 10 of its top customers now signed to long-term contracts, revenue visibility at Playtech is strong. Management stated that 2017 has started well and added that it “remains confident of a strong performance in 2017 and beyond.”

Despite the fantastic growth, Playtech is generating, the shares trade on a very reasonable valuation. Indeed, on a forward-looking P/E ratio of just 12.9 times next year’s earnings, and with a dividend yield of nearly 3%, Playtech looks to offer growth at a great price.  

The majority of City analysts share my thoughts, with sentiment towards the software specialist overwhelmingly positive. From 13 brokers surveyed, 12 rate the stock as a ‘buy’, with the remaining analyst placing a ‘hold’ on the company. Furthermore, there’s some attractive price targets on the stock, with analysts at Morgan Stanley and Berenberg placing price targets of 1,350p and 1,250p on the company respectively.

Playtech shares have risen 13% year-to-date, however in my opinion, there’s further to run.

Telit Communications

Another tech stock exhibiting growth at an attractive valuation is Telit Communications (LSE: TCM).

The Internet of Things (IoT) specialist also published impressive FY2016 results recently, with revenue rising 11% to $370.3m, adjusted EBITDA climbing 19.9% to $54.4m and adjusted earnings per share increasing 21.7% to 26.4 cents. The company reduced its net debt from $29.1m at the interim results stage to $17.7m, and also boosted its cash balance to $9.8m, up from $1.1m at the start of the year. A total dividend for the year of 7.4 cents was also declared, a rise of 23.3% on last year.

Chief executive Oozi Cats stated that the IoT market is “rapidly gaining momentum across an increasing number of industrial enterprises – large and small – around the world”. The CEO added that Telit is “very well positioned to address the numerous opportunities.

Telit shares underwent a significant correction in late 2015 as delays to product launches hit profitability. However the company now appears to have its mojo back, as illustrated by its recent IoT collaboration with tech giant Cisco. Investors have taken note, and Telit shares are already up an impressive 27% this year. However despite the rise, the stock trades on a forward looking P/E ratio of 16.6 times next year’s earnings, which I reckon is a steal for a company operating in such a high growth area. As such, I believe the stock could make an excellent long-term ISA holding for risk-tolerant investors.

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

Edward Sheldon owns shares in Telit Communications. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d apply the Warren Buffett method to buying shares

Learning from billionaire investor Warren Buffett, our writer explains his own approach to investing in shares for his portfolio.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

This dividend share yields under 1% — but I’d still buy it

This dividend share has a low yield. So why would our writer consider adding it to his income portfolio?

Read more »

Young lady working from home office during coronavirus pandemic.
Investing Articles

Looking for a good share to buy? Here’s how I do it

Here are two approaches our writer uses when hunting for a good share to buy for his portfolio to aim…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

One cheap FTSE 100 share I’d buy for a new bull market

This FTSE 100 share is unloved and starting to look seriously cheap, says Roland Head.

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

How I’d invest £500 in UK shares in 2022

Investing a small amount of capital in UK shares can result in high commission costs. Zaven Boyrazian explains how to…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 battered FTSE dividend stocks to buy in July!

I'm still searching the FTSE 100 for the best bargains to buy. I think these two big dividend shares are…

Read more »

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 top stocks to buy before the market rebounds

Edward Sheldon highlights three beaten-up stocks he'd buy before global stock markets stage a recovery from their 2022 declines.

Read more »