These UK-based tech stocks seem to me like good discount buys right now following recent dips. That’s why I’m considering adding them to my portfolio this month.
Ocado Group (LSE: OCDO) is primarily known for its online grocery operations.
Naturally, Ocado saw an influx of business in 2020 as more consumers and companies migrated online, making it a promising British investment for me. Its online grocery revenue grew by 35% to $2.18bn in 2020 thanks to an e-commerce boom driven by the pandemic. This figure is expected to increase if the habit of online grocery shopping remains sticky post-Covid.
The biggest threat to Ocado Group at the moment is increasing competition, I feel, including Tesco and Sainsbury’s. Should it lose ground to such competitors, the company’s bottom line could be at risk.
But I feel it has enough in its unique technology offer continues to grow. It has seen its stock price soar 54% in the past 12 months from 1,368p to 2,115p. However, with the Ocado share price down almost 15% to 2,115p from 2,481p in three months, I’m adding it to my watchlist as a discount buy.
Games Workshop (LSE: GAW) is a British manufacturer of miniature wargames, best known for its ‘Warhammer’ series. This ‘nerdy’ company may not seem like a typical tech stock, but its 5m online users beg to differ. It’s one of the FTSE 250’s top performers of the past decade, soaring more than 1,800% in that time. And, the Games Workshop’s share price has soared more than 110% in the past year, from 4,896p to 10,402p today.
Operating profit doubled to £92m in the six months ended November 2020, while the company currently forecasts a repeat doubling of operating profit. Online channel revenue has also surged 87% as consumers continue to enjoy gaming during lockdown.
One major concern for me is that as lockdowns end, gamers who’ve come to the firm’s products anew could lose interest, resulting in a sales decline. The company has a big job ahead of it to maintain this strength. But with an expensive P/E ratio of 35, shareholders will need to see long-term growth potential in order to justify the price.
Yet I believe that Games Workshop has not yet scratched the surface of its online potential. That’s why I’m adding it to my watchlist now.
Blue Prism (LSE: PRSM) makes robotics software in more than 60 countries and added 490 new customers in 2020, while maintaining a gross revenue retention rate of 98%. Its board has also discussed plans for a US listing, where it believes it could receive a higher valuation, based on recent performances of US-listed tech stocks that saw their share prices soar in the past year.
The company is currently valued at more than £1.25bn, and despite coronavirus-induced volatility in 2020, its share price has risen 15% in last year from 1,121p to 1,299p.
Its £40.3m 2020 losses are a concern for me. Although these losses had narrowed year-on-year, the company was forced to restate its financials in January, meaning that the actual loss was £5m higher than originally stated. Though this was just a once-off event, it isn’t a good look for the company and leaves a black mark on its record.
For now though, I’m giving Blue Prism the benefit of the doubt and adding it to my April watchlist.
The Motley Fool UK owns shares of Games Workshop. The Motley Fool UK has recommended Ocado 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.