3 Top Tech Buys For 2015: ARM Holdings plc, Imagination Technologies plc and Pace Technologies plc

ARM Holdings plc (LON:ARM), Imagination Technologies plc (LON:IMG) and Pace Technologies plc (LON:PIC) could be winners in 2015

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.

It is no secret that technology stocks took a bit of a battering earlier on in the year. On April 11th 2014, the NASDAQ dropped 3.1% — its worst one-day percentage loss since 2011 — but since then the index has steadily recovered gaining 15% so far this year: on December 29th 2014 it closed at 4,806, its highest close since March 2000.

Anyone who is everyone has been willing to give technology stocks a chance. Legendary investor Jim Mellon (net worth approximately £800m) is also an advocate for investing in the technology sector in his latest book titled Fast Forward – The Technology and Companies Shaping Our Future. Within, Mellon points out the merits of driver less cars, robotics and nanotechnology.

So here are my top three technology stocks to invest in for next year.

ARM Holdings (LSE: ARM)

Despite an analyst at broker Liberium saying that the “smartphone party is over” and “licensing can’t grow at the same rate indefinitely”, the UK chip maker is upbeat about the fourth-quarter and beyond. ARM expects its smartphone royalty revenue growth to accelerate to a 15%-25% compound annual growth rate (AGR) up to 2018 from less than 8% this year. However, ARM has to “watch its back”. US chip maker Intel plans to launch a competitive smartphone product SoFIA to market in early 2015, so the pressure is on in the smartphone world. Also ARM’s finance director, Tim Score plans to leave in 2015 which could spark management woes.

Imagination Technologies (LSE: IMG)

The company beat analysts’ forecasts with its most recent set of results in mid-December; however, it reported a pre-tax loss of £10.7m, down from a profit of £2.2m. The UK microchip designer, which counts Apple as its biggest customer (and ARM Holdings as its UK rival), earlier launched MIPS Creatot I20 – which targets hobbyists and children who want to learn computer coding. This is a company which is continually innovating and developing. Imagination expects a stronger performance in the second half of the year and has plans to bump up its operating profit margins from 14% to 30-40% in the next three to five years. Although its shares have fallen 20% since June (2014), it could be perceived by some tech-hungry investors as a good buying opportunity.

 Pace Technologies (LSE: PIC)

The FTSE 250 company has seen its shares nearly quadruple in the past three years. It has built on its relationship with US cable providers such as Comcast and AT&T. Pace recently appointed a new group chief financial officer (CFO) Mark Shuttleworth, an appointment which analysts welcomed, although the sudden resignation of the previous CFO Roddy Murray did cause a bit of a share wobble. The set-top box maker trimmed its full-year revenue forecasts by 3% to $2.6bn-$2.65bn in November 2014, however, it boosted its projected operating margin to more than 9% for the full year. Things look rosy for Pace if they expand into software or  the “smart” connected home market, according to broker Liberium.

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.

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

More on Investing Articles

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

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

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

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »