The Motley Fool

Can ARM Holdings plc Beat Technology Rivals CSR plc, Pace plc, Inmarsat Plc & The Sage Group plc?

I’ve been taking a look around the various sectors of the FTSE 100, and I’m going to finish today with a look at five companies pulled from three sectors but which all fit under a general “technology” umbrella.

ARM HoldingsARM Holdings (LSE: ARM) (NASDAQ: ARMH.US) is the big one, with the chip designer’s shares having soared by more than 900% over the past decade to 917p.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Next is CSR (LSE: CSR), another semiconductor company also based in Cambridge with ARM. CSR’s Products are mainly aimed at communications — Bluetooth, GPS, Wi-Fi, etc. CSR’s shares are up 220% over three years to 759p.

Inmarsat (LSE: ISAT) does satellite-based communications. But its not your usual mobile phone company — it provides services to governments, businesses, maritime users and others via its network of 11 geostationary satellites. Inmarsat shares have been volatile, but they’re up 150% over five years to 720p.

Then comes Pace (LSE: PIC), the digital TV specialist that ships millions of set-top boxes every year. And finally Sage Group (LSE: SGE), the producer of accounting and enterprise planning software. Pace shares have six-bagged over 10 years to 302p, with Sage up 125% over the same period.

  ARM CSR Inmarsat Pace Sage
Market cap £13.2bn £1.27bn £3.19bn £0.96bn £4.14bn
EPS change 2013 +40% +64% -7% +26% +12%
P/E 52.6 22.5 21.5 11.6 14.8
Dividend Yield 0.5% 1.3% 3.8% 1.1% 3.4%
Dividend Cover 3.66x 3.38x 1.22x 8.07x 2.00x
EPS change 2014* +11% +4% -23% +13% 0%
P/E 40.5 26.7 26.5 9.9 17.1
Dividend Yield 0.7% 1.2% 4.1% 1.1% 3.1%
Dividend Cover 3.47x 3.09x 0.92x 9.16x 1.89x
EPS change 2015* +23% +19% -7% +8% +9%
P/E 33.0 22.4 28.4 9.1 15.7
Dividend Yield 0.9% 1.3% 4.2% 1.3% 3.3%
Dividend Cover 3.47x 3.34x 0.82x 8.59x 1.92x

* forecast

A unique proposition

Inmarsat has had a couple of tough years with cuts in government expenditure, so dividends will be squeezed if earnings don’t get growing again — and that’s been hampered by delays in its latest satellite launch. For me it’s a company that seems to have great potential, but which I really don’t know how to value right now, so it’s not my choice.

Sage produces essential business software and is doing well at it, with relatively modest P/E valuations and a dividend that’s a little above average and is adequately covered. But for technology growth, it doesn’t grab me like the others.

I think Pace is looking undervalued, and there’s surely plenty of growth left in the market for all those magic boxes that come with digital television services. There’s little in the way of dividends at this growth stage, but there’s plenty of cover by earnings to hike them when the firm gets closer to maturity.

Chip design

I’ve already spoken of my liking for ARM Holdings, and I think I’d extend that to CSR too. I think it’s a bit of a dark horse with some definite potential, and I like it enough that I’d dig deeper if I was considering buying.

But I do think we’re at one of those rare moments right now when ARM shares are relatively undervalued — and as I know the company better than any if the others here, ARM would be my choice.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.