UK shares: 1 cheap tech stock primed for growth

Jabran Khan is looking for UK shares primed for growth to add to his holdings. Here’s a tech stock he likes.

| 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.

I believe some UK shares are primed for growth ahead and look cheap right now. One example I currently like for my holdings is Learning Technologies Group (LSE:LTG).

E-learning and training

Learning Technologies Group is a market leader in the fast-growing e-learning and training marketplace. Since forming in 2013, the company has grown into a worldwide business with 5,000 employees and operations in over 30 countries across Europe, the US, Asia-Pacific, and South America.

As I write, LTG shares are trading for 166p. At this time last year, the shares were trading for 177p, which is a 6% decrease over a 12-month period. More tellingly, the shares have dropped nearly 30% from 235p per share in September, to current levels. Recent macroeconomic pressures have resulted in a sell-off in growth stocks, which as placed pressure on shares like LTG.

UK shares have risks

Learning Technologies has seen demand increase due to the Covid-19 pandemic and new ways of enabling workforces throughout the world. As pandemic restrictions ease, there is a chance this demand could dwindle unless working habits are set to change forever as a result of the pandemic. Any drop in demand could affect performance and any returns.

The company also has a track record of acquisitions to enhance its offering and boost growth. I usually like firms that complete acquisitions for this purpose but there is always a risk that this strategy doesn’t work out. There are many examples of this among other UK shares when firms over-pay or are unable to amalgamate the new firm into the existing business. This can be costly.

Why I like LTG shares

Despite the recent drop in the Learning Technologies share price, I do believe it operates in a growth market and is well-placed to benefit in the coming years. I believe that the pandemic has changed working habits and how some businesses operate. The rise of hybrid and home working has increased and many firms have vowed to remain the same for the future. Learning Technologies’ market position and presence in many territories throughout the world should see its performance grow, in turn, offering me a lucrative return over time.

Learning Technologies has a good track record of performance. I do understand past performance is not a guarantee of the future, however. Looking back, I can see revenue has increased for the past four years in a row. Coming up to date, it released a full-year post-close update at the end of last month. It revealed revenues “not to be less than £254 million (2020: £132.3 million)”. This represents excellent growth, in my eyes. Detailed full-year results are expected in April.

I like UK shares that make me a passive income through dividend payments. Learning Technologies shares currently sport a dividend yield of under 1%. I expect this to grow when full-year results are announced in a few months and the coming years as I expect growth to continue. I do understand that dividends can be cancelled, however.

Overall, I think Learning Technologies is primed for growth due to digital transformation and I expect the shares to eventually recover. The current share price drop has created a buying opportunity. The post-close update fills me with confidence of growth in the future, and a dividend for a passive income is a bonus. I’d add Learning Technologies shares to my holdings.

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.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

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 »