2 UK tech stocks to buy and hold today

Tech stocks exploded in 2020. But what about once the pandemic is over? Zaven Boyrazian shares two tech stocks he owns and would still buy today.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Tech stocks have been on fire over the last 12 months. With the pandemic causing disruption worldwide, businesses turn to technology innovations to cope.

The sudden surge in demand has caused many technology companies’ share prices to skyrocket. By what will happen after the pandemic ends? Some might fall back.

But I’ve found two tech stocks I believe could prosper longer term and I’ve bought shares in both. 

The tech stock driving e-commerce sales

E-commerce has flourished under lockdown conditions. Since all non-essential shops are closed, consumers are turning to online stores for their retail therapy. So I wasn’t surprised to find out that since early 2020, over 85,000 new online businesses were established in the UK.

But with so many online stores to choose from, the need for marketing has increased drastically. And that’s where dotDigital (LSE:DOTD) comes in.

The tech stock provides software-as-a-service (SaaS) to its clients via its Engagement Cloud platform. The platform automates the marketing process for businesses to increase traffic, engagement, and customer retention. Put simply, it uses email, text messages, and social media posts specifically tailored to each customer to generate highly effective targeted adverts.

However, as this process requires customer data analysis, it opens up the firm to some regulatory risk. Namely, the General Data Protection Regulation Act commonly referred to as GDPR.

The legislation helps protect personal data by limiting how it can be collected and used. But it also creates a speed bump for targeted advertising platforms like Engagement Cloud.

dotDigtal appears to have adapted quite well to the new regulatory environment in my eyes. However, if further restrictions are introduced, it could create new challenges that will impact the business. What’s more, if a security breach occurs and personal data gets exposed, the tech stock is likely to suffer enormous reputational damage.

UK tech stock driving e-commerce sales

A Remote learning business solution

Covid-19 prevents in-person training from taking place. So, businesses have to turn to remote learning solutions, like those provided by Learning Technologies Group (LSE:LTG).

The tech stock has a plethora of software and service offerings that can be easily integrated with its clients’ existing training pipelines. This digital approach allows employees to receive and complete vital training from the comfort of their own homes. And since they can go through the learning material at their own pace, it makes the entire process far more enjoyable.

Face-to-face training will undoubtedly return after the pandemic ends. But the services provided by this tech stock are a cheaper alternative that I expect some business will continue to use. Even before Covid-19 hit, the company achieved average annual revenue growth of over 60%.

However, despite this impressive growth, the firm is certainly not without risk. The end of the pandemic could mean slowing growth. And the remote learning market is highly competitive as the barriers to entry are quite low. The stock has a size advantage and established reputation. But any gaps in its offerings could quickly be taken advantage of by a rival firm.

The bottom line

I think these businesses should be just as essential in 10 years as they are today. Perhaps even more so.

Given their enormous growth potential, I decided the rewards outweigh the risks. I own shares in both tech stocks, and even though their valuations today are a bit high, I’d still buy more!

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 assessed. Consider taking independent financial advice.

Zaven Boyrazian owns shares in dotDigital and Learning Technologies Group. The Motley Fool UK has recommended dotDigital Group and Learning Technologies. 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.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

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

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »