Despite the stock market crash back in March, some UK stocks have done exceptionally well over the last six months. The rises by both Ocado and AO World highlight the appetite investors have for online only retailers. But I think there are even better companies out there to invest in.
The backer of Tesla and other tech companies
One such company is Scottish Mortgage Investment Trust (LSE: SMT). The share price is up 44% over the last six months. This has been driven by its focus on tech, a principal beneficiary of the covid-19 situation.
Its top holding is Tesla. This is followed by holdings in Amazon, Tencent, Illumina and Alibaba. Spotify and Netflix are also in the top 10 holdings.
The trust, run by Baillie Gifford, is a top performer. The manager though has other strong-performing trusts. This gives me hope the current outperformance isn’t a flash in the pan.
Technology isn’t going away so the trust should keep doing well and the share price might well keep flying upwards. But a word of warning — it’s closely tied to the success of its biggest holding, Tesla.
A UK tech stock riding the 5G wave
Spirent Communications (LSE: SPT) is another tech stock that’s making moves upwards. It’s piggybacking on expectations of a 5G revolution. The company provides testing and assurance services to the telecoms industry.
Spirent says that 5G isn’t yet at the end of its journey. There will be a lot more ongoing demand for its services is the key message. Spirent Communications, like Scottish Mortgage, is in the right place at the right time.
The latest results showed the company is making good progress, which should work through to the share price (it’s already nearly double its low during the stock market crash). Spirent saw revenue rise 7% in its first half to $233.7m (£177.53m). On a reported basis, operating profit was up 97% at $35.6m and its profit before tax improved 93% to $36m, while basic earnings per share grew 94% to 5.28 cents.
Devoted fans bring in the profits
Games Workshop (LSE: GAW) has been getting a lot of press attention. It’s not hard to see why. The share price has been motoring upwards. The company displays a lot of signs of a quality business. It has repeat, dedicated customers, high margins and the ability to grow sales and profits.
The shares have been hitting new highs recently. The boost has been provided by results last month that showed a 10% jump in profits before tax to £89.4m for the year ending on 31 May. At the same time, cash on hand before paying dividends stood at £70.5m, against £50.7m in the year before.
On a more operational level, it’s encouraging to see its roughly 40% jump in user numbers on the Warhammer website to over 8m. This indicates there are a lot of fans out there.
The opportunity to licence itself creates the next big opportunity for Warhammer and as such, I think the shares, though expensive already, could keep moving higher.
