FTSE 250 incumbent Computacenter (LSE: CCC) has been on my radar for some time. I will be buying some shares soon. Here’s why!
Solutions for the digital revolution
Computacenter is an IT infrastructure business helping organisations source and implement the necessary technology to stay up to date and ahead of the curve in their respective industries. With a growing presence, it has grown to become a leading business in Europe in its space.
The shares have been on a great run in recent years, and currently show no signs of slowing. Over a 12-month period, they’re up 24%, from 2,306p at this time last year to current levels of 2,886p.
The bull and bear cases
Computacenter’s recent track record of performance is hard to ignore. Consistently growing revenue, profit, and investor returns is enviable. Plus, a recent pre-close statement released last month for the year ended 31 December 2023 made for excellent reading. Revenue is set to increase by a healthy 12% and the business said it should post record profit before tax. This, all the while navigating tough economic conditions due to macroeconomic volatility. Full results are due on 20 March. However, it’s worth noting that past performance is not a guarantee of the future.
Speaking of the future, Computacenter’s growth and increasing market share could continue to stimulate further growth moving forward too. The continued tech boom and digitization places the firm in a great position to capitalise and boost performance and investor sentiment, as well as returns. Part of this growth could come from the artificial intelligence (AI) boom, as it ramps up.
Moving onto returns, a dividend yield of 2.4% is attractive, and could grow in line with performance. However, I’m conscious dividends are never guaranteed.
Finally, the shares still look decent value for money to me on a price-to-earnings ratio of 16.
Looking at some potential risks, economic turbulence is still a challenge the business must contend with. If volatility continues, could spending weaken and Computacenter’s performance and returns be impacted? I think there is a chance of this, and I’ll keep an eye on updates to see how the firm fares on this front.
Furthermore, although not as big a threat as the above-mentioned risk, competition in the tech sector is rife. There are other players vying for the same clientele looking to grow their own business and presence that could hurt Computacenter. This is of course a risk for most stocks.
Final thoughts
Honestly, I wished I had snapped up Computacenter shares earlier but there’s still an opportunity here, in my opinion.
An attractive valuation and passive income opportunity, coupled with excellent growth potential make the shares an enticing prospect for me.
I’ll be buying some then next time I have some investable cash.
