2 FTSE 100 ‘tech stocks’ I’d buy for my ISA today

Technology is likely to drive growth for many FTSE 100 shares. But some more than others. Our writer considers his favourite tech stocks 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.

A young black man makes the symbol of a peace sign with two fingers

Image source: Getty Images

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.

The FTSE 100 isn’t known for its technology stocks. Its largest sectors are consumer staples, financials, and energy. In fact, technology is just 1% of this large-cap index.

At first glance, investors looking for exposure to this fast-growing sector might be disappointed. But looking deeper, there are a handful of tech-focused Footsie shares that are classed in the industrial or consumer discretionary sectors.

I’d buy this FTSE 100 security giant

For instance, BAE Systems (LSE:BA.) is best known as an aerospace and defence company. But technology is at the heart of this growing business. One area where it excels is in cybersecurity.

Cybercrime is a significant and growing threat to individuals, businesses, and public organisations. It costs the UK billions of pounds and threatens national security.

As a leading supplier of cybersecurity solutions and digital defences, BAE is well-placed to profit.

Investing for the future

Artificial intelligence is likely to quicken progress by both attackers and defenders. That’s why it’s important to be at the forefront of technology. As such, it’s encouraging to see that BAE has invested £5.1bn in R&D over the last three years.

By advancing and leveraging its technology, it could remain competitive for years to come, in my opinion.

Bear in mind that the business is subject to geopolitical uncertainties and a change in strategic direction by its largest customers could impact long-term projects.

That said, it offers a robust operating model and strong balance sheet. Profits have grown by over 10% a year over the past five years, and look set to continue on that trajectory.

Discovering tech giants

RELX (LSE:REL) might not be a household name, but it’s arguably one of the UK’s biggest tech companies and success stories. It invests £1.2bn a year on information technology to help provide analytics and decision tools to customers in over 180 countries.

With a market capitalisation of over £60bn, it’s now the ninth-largest company in the FTSE 100.

One reason why it’s not typically known as a tech company is because for years it was a publishing and media business. In recent decades it has transformed into a leading data-focused company that combines content with sophisticated analytics.

I like this Footsie stock as it’s made up of multiple subscription businesses. That means repeat earnings. It also generates lots of cash and offers a high return on capital employed.

AI risks and rewards

Artificial intelligence has been a key theme for 2023 and is likely to dominate over the coming decade. If executed well, AI could transform this business further. But risks remain and the picture is still uncertain.

Hypothetically, if its data was in the public domain, then generative AI might have had a negative impact on the business. But much of its data and analytics is owned in-house. It’s also somewhat protected by operating four very diverse business areas.

Recent trading shows strong momentum with both sales and profits growing steadily. Overall, I’d describe it as a fine example of a quality growth stock.

Both BAE Systems and RELX jump to the top of my list for tech-focussed UK stocks. And if I had spare cash in my Stocks and Shares ISA, I wouldn’t hesitate to swoop in and buy both today.

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.

More on Investing Articles

Investing Articles

After falling 13% this ultra-high-income share yields 7.25% with a P/E of just 10.1!

Harvey Jones couldn't resist buying this FTSE income share. He thought it looked great value in September and it's even…

Read more »

The flag of the United States of America flying in front of the Capitol building
Growth Shares

2 FTSE 100 stocks that could soar while Donald Trump is US President

These two FTSE 100 companies have a lot of exposure to North America. So, they stand to benefit from a…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,000 of savings? Here’s how I’d aim to turn that into £5,832 a year of passive income!

Smaller initial investments in high-yielding stocks can generate much greater passive income over time, especially if dividend compounding is used.

Read more »

Investing Articles

Will the Lloyds share price drop to 50p in 2025 and should I buy the stock if it does?

The Lloyds share price has fallen 12% in six weeks, making the stock cheaper on a price-to-book basis than NatWest.…

Read more »

Investing Articles

As BT’s share price drops 8%, should I buy more?

BT’s share price looks a bargain to me on several key stock measurements, offering a high yield as well, supported…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

After falling 87% in 45 months, could Dr Martens be a winning value stock?

Ahead of its half-year results due to be released later this month, our writer considers whether this FTSE 250 icon…

Read more »

Investing Articles

Forget the FTSE 100! Here are 3 dividend shares to consider for a great passive income

If searching for ways to supercharge a passive income portfolio, these non-Footsie dividend shares are worth a closer look, says…

Read more »

Investing Articles

Up 41% and 17%, these FTSE 250 shares still look like bargains to me!

Looking for the best FTSE 250 shares to buy at rock-bottom prices? Here are two Royston Wild thinks deserve close…

Read more »