UK tech shares have been big beneficiaries of the coronavirus crisis. Indeed, the crisis has only accelerated trends that have been in place for several years now. Technology has become a lifesaver for many companies and consumers in the crisis, and this is unlikely to change.
Therefore, now could be a great time to buy a basket of the best UK tech shares such as the two companies profiled below.
UK tech shares surge ahead
Sage (LSE: SGE) is one of the most high-profile UK tech shares. The accounting software provider has been around for decades, but in recent years, its growth has accelerated.
The company has moved its platform onto the cloud, which has helped broaden its customer base. A monthly subscription also provides a recurring revenue stream for the group.
As UK tech shares go, Sage is one of the most established and profitable businesses. In 2019, the firm reported an operating profit of £382m. Its latest trading update shows management still believes revenue will grow for the full year. Organic recurring revenue rose by a better-than-expected 10.3% in the first half.
While the pandemic has impacted new customer acquisitions, Sage is still optimistic that its offering will prove popular with clients in the long run. To help those customers that are struggling, it is offering payment ‘forgiveness’. This may help build client loyalty.
Management is so confident in the company’s outlook it recently increased Sage’s half-year dividend by 2.5%. Of all the UK tech shares on the market, Sage has one of the best dividend track records. Its payout has risen at 7% per annum for the past seven years.
As such, it may be worth buying this income and growth champion as part of a diversified portfolio of UK tech shares.
Just Eat Takeaway
Just Eat Takeaway (LSE: JET) has seen sales boom in the pandemic as customers have been stuck at home. The number of orders processed by the group increased by 6% year-on-year in the first quarter of 2020.
The company wants to capitalise on this success by buying US peer Grubhub. The $7.3bn transaction will create a global tech giant, and make Just Eat one of the most successful UK tech shares.
Unfortunately, the company’s growth prospects mean that the stock is relatively expensive. Analysts have the stock trading on a 2021 price-to-earnings (P/E) multiple of 75. However, I think it is highly likely that analysts will revise their 2020 growth forecasts for the business higher due to the boom in demand in the pandemic.
Just Eat is one of the few UK tech shares that has a global footprint. That deserves a premium over the rest of the sector, I feel. With that in mind, it may be worth buying the stock despite its high valuation.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. 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.