Tech companies around the world have suffered alongside many other industries as a result of the impact of Covid-19 on business.
With widespread lockdown restrictions in place as a result of the global pandemic, technology has never been so important for many of us in our daily lives.
On top of this, regardless of the economic climate, it’s inevitable that technology will continue to become an ever more essential component of the world we live in. But what does all this mean for the tech companies listed in the FTSE 100 index?
FTSE 100 tech companies
Well, the FTSE 100 tech stocks have been no exception to the recent plummet in prices during the stock market crash. The FTSE techMARK 100 index has shed around 20% of its value since a mid-February high.
Despite the gains posted across the board in recent weeks, it’s impossible to say whether the market has bottomed out. But, while companies are still trading on cheap valuations relative to pre-crash prices, I’d be keeping an eye out for some bargains.
For me, tech stocks are unrivalled in terms of their future growth prospects. As an investor, finding tech companies with great future prospects and innovative business strategies will most often result in attractive returns over the long-term.
With that in mind, here are two FTSE 100 tech companies that I think meet the criteria.
Sage (LSE: SGE) is a British multinational enterprise software company headquartered in the north of England. The company is a global market leader in providing technology to small- and medium-sized businesses, specialising in providing cloud technology and support.
The group’s share price has fallen by around 21% in the stock market crash and now trades at a price-to-earnings ratio of 26.10. That’s relatively high compared to many other FTSE 100 stocks but, in my opinion, reflects bright future prospects.
The company’s performance was solid in 2019. Organic revenue growth increased 5.6% and the group’s underlying cash conversion reached 129%, indicating strong free cash flow.
Despite widespread economic uncertainty and a decline in the share price, Sage’s long-term growth prospects look great to me.
According to a recently published annual report, “Sage operates in a total addressable market set to be worth $36bn in FY20 comprising 72m businesses”. That’s a staggering prediction that underscores the potential for the company to grow and expand into new and existing markets.
Global technology company Experian (LSE: EXPN) is a market leader in data and analytics. The group’s two main business activities are in consumer services, and business-to-business data and decisioning.
The fall in the company’s share price is identical to that of Sage’s, currently sitting at around a 21% drop. Despite this, the P/E ratio still remains noticeably high at around 35.78. However, I think there’s good reason for this.
Last year, Experian’s revenue and operating profit were up 6% and 11% respectively. What’s more, revenue increased in both business activities. North America makes up the majority of the company’s revenue, but the Asia Pacific region is growing rapidly.
Big data is a colossal market that continues to rapidly expand. Clearly, that means the company is well-set to continue growing and deliver attractive returns over the long term. With a bright future on the cards, I think this FTES 100 tech stock is a solid buy.
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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian and Sage Group. 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.