Christmas lockdown: 1 growth tech I think will thrive in December

Christmas lockdown rules have been announced. Zaven Boyrazian analyses a firm perfectly positioned to thrive throughout December.

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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.

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Last week the UK government announced the Christmas lockdown rules for this year’s festive period. A total of three households can meet up and celebrate together between the 23rd and 27th of December.

Christmas lockdown rules are causing increased traffic!

This relaxation of the Covid-19 lockdown is causing a surge in people travelling around the country.

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National Express — the UK’s biggest coach operator — stated that since the announcement of the new rules, it has seen a “significant increase in traffic” to their website. Most of the trips booked are travel to and from London.

Network Rail is expecting a similar surge in traffic on Britain’s railway lines and has already begun negotiating with the Department for Transport regarding the increase in the number of running trains over the Christmas period.

Typically, during the Christmas period, large portions of the UK’s rail network is closed to carry out any major maintenance work. Often planned a year in advance, this maintenance is critical to the safe operation of the train network. Thus, it is unlikely to be postponed. However, minor engineering work might be, allowing for an increase in running trains over the period.

But, it is not just public transportation that has seen an increase in traffic. Car use has been slowly climbing over the past few months and is now back to its pre-Covid-19 levels. With safety concerns over public transport and restrictions being temporarily lifted, the number of cars on the road may increase even further.

An opportunity for this tech stock?

All of this is excellent news for the tech stock Tracsis (LSE:TRCS). Tracsis is a technology company operating in the transportation sector. It allows transport operators to run their networks efficiently while simultaneously reducing costs.

Using its proprietary remote condition monitoring (CRM) system, Tracsis can detect irregularities within the railway lines. It reports the issues to an engineering team who can investigate and perform any necessary maintenance before it becomes a severe issue.

The business also engages in the collection and analysis of traffic data. It uses this data to plan optimised routes for trains, cars, and busses within pedestrian-rich areas.

I’ve discussed this tech stock before, highlighting the impact of Covid-19 on its revenue stream. Since then, the company has posted its final results. These risks appear to have materialised in a decline of £10m of revenue from its traffic and data services division.

Despite this reduction, the firm’s second division – rail technology & services – has continued to beat expectations. Revenue increased by 17% combined with an underlying profit boost of 33%. The increase in performance stems from the company’s ability to quickly switch to a remote working scheme, as well as securing a new multi-year contract for their TRACS Enterprise product.

The bottom line

Overall, total revenue came in at £48m — a slight decrease from 2019’s £49.2m. However, this reduction stems from the temporary effects of the pandemic. With multiple Covid-19 vaccines on the way, such effects should begin to subside as we enter the second half of 2021.

When combing this information with the expected surge in traffic over the Christmas period, I believe Tracsis is ‘on track’ to return to its historical double-digit growth.

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Zaven Boyrazian does not own shares in Tracsis. The Motley Fool UK has recommended Tracsis. 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.

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