A stock price alone is fairly meaningless since market capitalisation is ultimately what matters. But a low price does mean investors end up with more shares for their money, giving a sense of more substantial ownership. And now that economic conditions are slowly improving, snapping up thousands of shares in growth enterprises could be the key to capitalising on long-term recovery trends.

With that in mind, let’s explore two companies that have recently fallen out of favour but look primed for a comeback.

The return of digital advertising

Following lockdowns in 2020, the ecommerce industry skyrocketed as households became dependent on online shopping. This proved to be an enormous tailwind for advertising group dotDigital (LSE:DOTD).

The firm provides advertisers with an automated marketing solution. Businesses can use its platform to target customers with custom-tailored email, social media, and SMS marketing campaigns to boost recurring spending.

With much growth pulled forward, dotDigital has unsurprisingly struggled to keep up the momentum. And the situation has only got more challenging as economic conditions slow demand for e-commerce. That’s why the growth stock is down just over 70% from its August 2021 highs!

However, looking at its latest results, the top line is still expanding. And average revenue per customer is also rising, sitting at £1,573 per month versus £1,422 a year ago.

Of course, the company isn’t the only one playing in the digital marketing sandbox. And there are numerous competitors with more financial resources at hand.

But management recently announced that dotDigital’s platform now uses generative AI and machine learning to help marketers improve the effectiveness of their campaigns as well as provide predictive analytics. Therefore, I think it’s fair to say the firm is making the right moves to give customers a critical advantage.

Another growth stock comeback opportunity?

Shareholders of Learning Technologies Group (LSE:LTG) are most likely horrified by the growth stock’s performance. Despite the financials heading in the right direction, the shares have tumbled nearly 30% over the last 12 months. What’s going on?

As a quick reminder, LTG is a digital learning and talent management service business. Following the 2021 acquisition of GP Strategies, it’s one of the biggest companies operating in this space. And sales have grown significantly from £93.9m in 2018 to £596.9m at the end of 2022. Over the same period, earnings have jumped from £4.2m to £30.4m.

However, a large chunk of this growth stems from its GP Strategies acquisition, which is worrying investors. The deal was expensive, and management had to take on considerable debt to fund it. And now that interest rates have risen, the group’s finance payments have shot up from £2.5m to £10.5m in a year.

While the growth stock has the cash flow to cover this expense, it’s putting pressure on margins that are rightfully concerning shareholders. However, with the acquisition going surprisingly smoothly, management has forecast that operating margins are on track to improve, offsetting the debt impact while providing excess cash flow to bring down the balance of outstanding loans.

So, while it may take some time to digest the acquisition, LTG seems to be on course to deliver solid long-term performance, in my opinion.

The post 2 UK growth stocks under £1 to buy now appeared first on The Motley Fool UK.

I see the recent declines in UK stock prices as opportunities to snap up good companies at relatively low prices. Here are three UK shares that I would buy this week for my Stocks and Shares ISA.

UK pet boom

CVS Group (LSE: CVSG) operates veterinary practices, laboratories, crematoria, and an online retail business. This £1.25bn market capitalisation company has managed to grow its revenues and profits by 15% and 17%, respectively, on average in each of the last five years. That’s a fantastic track record.

The UK’s pet population has almost certainly increased over the last couple of years, and CVS could see a prolonged growth in its revenues as a result.

In March 2020, the Competition and Markets Authority ruled that CVS’s purchase of a smaller vet chain reduced competition. CVS ended up selling the company and saw its share price tumble. The specifics of the ruling will make expansion in the UK small-animal vet field trickier to navigate. However, expansion into Europe and large-animal practice is underway, which should prove fruitful. The company also appears to be dealing fairly well with the industry-wide staff shortage.

A UK software share

Learning Technologies (LSE: LTG) provides in-person and online education and talent management services to corporations in the US (70% of business), Europe, and the UK.

A good chunk of this £810m market cap enterprise’s revenues come through multi-year software contracts. Many corporations must deliver training to satisfy regulations, which benefits Learning Technologies.

After making losses for much of the last decade, Learning Technologies swung to a profit in 2018 and has stayed in the black ever since, including during the pandemic. Annual revenue growth has averaged 56% over the last five years.

But I wonder why the company’s five-year average operating margin of 5% is so low, especially for a software-focused company. Also, the company raises funds from shareholders regularly, potentially diluting future returns, and increased its total long-term debt pile from £11m in 2020 to £188m in 2021.

Have cake and eat it

With a market cap of £110m, Finsbury Food (LSE: FIF) —  which makes bread and cakes for retailers (mainly supermarkets) and food service companies, like coffee shops – is the smallest of my three UK shares.

Its revenue growth has been somewhat lacklustre at an average of 2.6% per year over the last five years. But it is impressive how management has managed to preserve operating margins through some tough times, with supply-chains creaking and inflation soaring. It appears to make the kind of treats that customers love, even if they are experiencing tough economic times.

There are plenty of growth opportunities to pursue via organic growth or acquisitions. Gluten-free bread is one new area that looks fruitful, and management has been talking up artisanal bread.

However, I do note that management seems keen on financing acquisitions through debt. The health of this company’s balance sheet is something I should monitor closely.

The post 3 UK shares I’d buy this week appeared first on The Motley Fool UK.

• Calculating compounding growth of earnings, like Warren Buffett does, can be effective in finding consistently profitable companies
• Learning Technologies Group and Frontier Developments both boast strong earnings growth
• These firms have also reported significant increases in revenue

As one of the most successful investors of all time, Warren Buffett knows a thing or two about picking stocks. His technique of calculating the compound growth of earnings per share (EPS) can be very helpful for finding exciting growth stocks. I’m looking closely at this metric, then applying it to two FTSE AIM stocks. Let’s take a closer look. 

How Warren Buffett uses compound growth

Warren Buffett has long stated that investment growth requires time. This is because the power of compounding — that is, the constant rate of return over a given time period — may only truly be seen over a long period. In essence, calculating compound growth allows me to see which companies are consistently profitable over time.

The formula for working out compounding growth is: (V_final/V_begin)^1/t − 1, where V = value and t = time.   

To use the formula, we would take a data set, in our case the EPS figures. The ‘final value’ is the most recent figure in the set. The ‘begin value’ is the oldest figure.

One of Warren Buffett’s biggest holdings is Coca-Cola and we can apply the above formula to understand why he likes this business. Even in the last four calendar years, the EPS displays consistent growth. Its 2021 EPS was ¢2.26 and 2018 was ¢1.51. 

We begin by dividing 2.26, the ‘final value’ from 2021, by 1.51, the ‘begin value’ from 2018. This equals 1.49 and we then calculate 1.46^1/t. The period of time is four years, so 1.46^1/4 gives us 1.106. This result, minus 1, finally equals 0.106, which is 10.6% in average yearly growth in EPS. In my experience, this formula has been ruthlessly effective for finding the best growth stocks.

2 FTSE AIM stocks that display growth    

This process helped me find two growth stocks. The first, Learning Technologies Group (LTG), is a software support services firm. For the 2020 calendar year, EPS was 4.42p, compared to 1.29p in 2016. With the aid of the above formula, I have calculated that the compound annual growth rate of this company’s EPS is 27.9%. This is very appealing to me as potential investor.  

Its price-to-earnings (P/E) ratio, that may reveal if a company is under- or over-valued, is 73. This is far higher than a close competitor, Tribal Group, that has a P/E ratio of 28.79. Nonetheless, a recent trading update forecast that revenue for the 2021 calendar year will not be less than £254m. This is a major improvement from 2020, when revenue was just £132.3m.

Another business, Frontier Developments, a video games developer and publisher, has earnings growth of 19.5%. For 2021, this company’s EPS was 55.4p, having increased from 22.7p in 2017. The firm did swing to an interim loss for the six months to 30 November 2021, due to higher costs. Nonetheless, revenue increased 33% to £49.1m on a year-on-year basis.

The technique of calculating compound earnings growth is regularly used by Warren Buffett. While it should be supported with other information, like revenues, it is a good indicator of whether a company is performing for its shareholders or not. Both Learning Technologies Group and Frontier Developments fit the bill and I will be buying shares in both firms now.

The post Why I’m listening to Warren Buffett and buying these 2 FTSE AIM stocks appeared first on The Motley Fool UK.

E-learning and training

Learning Technologies Group is a market leader in the fast-growing e-learning and training marketplace. Since forming in 2013, the company has grown into a worldwide business with 5,000 employees and operations in over 30 countries across Europe, the US, Asia-Pacific, and South America.

As I write, LTG shares are trading for 166p. At this time last year, the shares were trading for 177p, which is a 6% decrease over a 12-month period. More tellingly, the shares have dropped nearly 30% from 235p per share in September, to current levels. Recent macroeconomic pressures have resulted in a sell-off in growth stocks, which as placed pressure on shares like LTG.

UK shares have risks

Learning Technologies has seen demand increase due to the Covid-19 pandemic and new ways of enabling workforces throughout the world. As pandemic restrictions ease, there is a chance this demand could dwindle unless working habits are set to change forever as a result of the pandemic. Any drop in demand could affect performance and any returns.

The company also has a track record of acquisitions to enhance its offering and boost growth. I usually like firms that complete acquisitions for this purpose but there is always a risk that this strategy doesn’t work out. There are many examples of this among other UK shares when firms over-pay or are unable to amalgamate the new firm into the existing business. This can be costly.

Why I like LTG shares

Despite the recent drop in the Learning Technologies share price, I do believe it operates in a growth market and is well-placed to benefit in the coming years. I believe that the pandemic has changed working habits and how some businesses operate. The rise of hybrid and home working has increased and many firms have vowed to remain the same for the future. Learning Technologies’ market position and presence in many territories throughout the world should see its performance grow, in turn, offering me a lucrative return over time.

Learning Technologies has a good track record of performance. I do understand past performance is not a guarantee of the future, however. Looking back, I can see revenue has increased for the past four years in a row. Coming up to date, it released a full-year post-close update at the end of last month. It revealed revenues “not to be less than £254 million (2020: £132.3 million)”. This represents excellent growth, in my eyes. Detailed full-year results are expected in April.

I like UK shares that make me a passive income through dividend payments. Learning Technologies shares currently sport a dividend yield of under 1%. I expect this to grow when full-year results are announced in a few months and the coming years as I expect growth to continue. I do understand that dividends can be cancelled, however.

Overall, I think Learning Technologies is primed for growth due to digital transformation and I expect the shares to eventually recover. The current share price drop has created a buying opportunity. The post-close update fills me with confidence of growth in the future, and a dividend for a passive income is a bonus. I’d add Learning Technologies shares to my holdings.

The post UK shares: 1 cheap tech stock primed for growth appeared first on The Motley Fool UK.

• Tech stock prices have been slashed by double-digits as uncertainty rises throughout the market, but it may have created fantastic buying opportunities
• One UK tech stock is enabling e-commerce stores to automate their marketing campaigns
• Another business is watching its revenues fly as demand for e-learning solutions remains strong, despite the pandemic slowly coming to an end

It’s been a rough couple of months for tech stock investors. With uncertainty growing in the markets, shares carrying lofty valuations have been punished quite harshly. But in some circumstances, investors may have gone overboard with their selling activity.

I’ve spotted two tech stocks that have suffered double-digit declines over the last five months, despite the businesses seemingly performing rather well. This, to me, looks like a buying opportunity, so let’s explore.

The tech stock driving online sales

With the adoption of e-commerce being accelerated courtesy of the pandemic, the number of online stores has skyrocketed. After all, thanks to platforms like Shopify, setting up an online retail business no longer has the massive barriers to entry that it used to.

But the increased level of competition is making it challenging for businesses to acquire new customers. That’s where dotDigital (LSE:DOTD) steps in. The company provides a cloud-based marketing platform that enables businesses to automate their advertising campaigns. By sending custom-tailored content across social media, email, and text messages, curious website visitors can be more easily converted into paying customers.

A lot of the group’s recent tumble is attributable to its high valuation. Even today, the tech stock still trades at a lofty price-to-earnings ratio of 45. And if further uncertainty enters the market, the recent volatility will likely continue.

However, given that the global market for digital advertising is expected to reach $786bn (£584bn) by 2026, I think this is a risk worth taking for my portfolio due to the potential reward.

Is the era of remote learning over?

The pandemic is ongoing. But with vaccines being distributed worldwide, normality is slowly returning to the working lifestyle. This has led to many investors believing Learning Technologies Group (LSE:LTG), a provider of e-learning solutions, could soon be in trouble.

Yet despite these fears and the subsequent decline of its share price, the company seems to be thriving. In its latest trading update, its performance came in better than analyst expectations, with revenues reaching as high as £254m. That’s nearly double what was generated at the height of the pandemic.

To me, this looks like demand for the company’s services remains elevated, despite the easing of lockdown restrictions. I will admit, it’s too soon to tell whether the boost in performance can be sustained in the long term. And if growth does begin to slow once the pandemic ends, it could send the tech stock further in the wrong direction.

But having said that, I remain optimistic. Why? Because e-learning solutions have introduced considerable cost savings for businesses that I doubt many are keen to give up. And that’s why I believe LTG’s recent tumble could be an excellent buying opportunity for my portfolio.

The post 2 tech stocks I’d buy ASAP before they recover! appeared first on The Motley Fool UK.

A future fintech superstar?

When it comes to doing international business, fluctuating currency exchange rates can significantly impact the bottom line. Meanwhile, moving large quantities of money across borders through standard methods like a wire transfer is both slow and expensive.

Alpha FX (LSE:AFX) is looking to change all that. By providing its services and expertise on a pay-as-you-go cost structure, the group has been able to cater to businesses of all sizes. That’s proven to be quite advantageous over larger financial institutions offering similar services that are often inaccessible to smaller enterprises.

Looking at the latest half-year report, revenue growth is exploding. Total sales over the first six months of 2021 came in at £34.2m versus £18m the year before. That’s a 90% jump! So it’s hardly surprising that the shares of this UK business are up 55% over the last 12 months.

As with any investment, especially growth ones, there are some risks to consider. Foreign exchange risk management is a complex process. And if a mistake is made, it could have a severe impact on a client’s profits. Needless to say, I doubt a customer would stick around if that happened. Meanwhile, with new fintech innovations popping up, its enterprise-scale international payment solution may soon face some sizable competition.

Having said that, I believe the risks are worth the potential reward. So, I’m definitely considering adding more shares of the UK company to my Stocks and Shares ISA in 2022.

Can these UK shares make a comeback?

One British stock that hasn’t been a stellar performer in my portfolio over the past year is Learning Technologies Group (LSE:LTG). The company provides a suite of remote learning tools for employers to train their staff from anywhere in the world.

In 2020, a remote learning solution was unsurprisingly in high demand because of the ongoing pandemic. Unfortunately, there were some initial disruptions surrounding new project launches. However, it seems those problems have been largely resolved. Looking at the latest half-year results, revenue has grown by 29% over the first six months of 2021.

Some 7% of this growth originated from organic sources. The rest came from acquisitions, which the company has a habit of making. Bolt-on acquisitions can be a source of long-term value creation, but there’s always the possibility that future performance doesn’t deliver on expectations. That’s why seeing organic growth start to materialise is encouraging in my mind.

There are some concerns that the demand for remote learning solutions will suffer once the pandemic ends. While I think there is some merit to this fear, shares of this UK business were thriving long before Covid-19 turned up. And I believe they can continue doing so long after the virus is gone. Therefore, I’ll personally be using the recent drop in the stock as a buying opportunity for my ISA.

The post £5k to invest? 2 UK shares I’d buy in a Stocks & Shares ISA this year appeared first on The Motley Fool UK.

However, since last Friday, the market has been in a bit of a downward spiral, potentially making things a lot easier.

After discovering a new strain of Covid-19 emerging from southern Africa, fears of another Christmas lockdown are on the rise. Apart from being frustrating for families eager to celebrate the holidays, the re-introduction of restrictions could be very disruptive to businesses.

2020 serves as a perfect example of the worst-case scenario if the Omicron variant proves to be as nasty as some people are currently speculating. So I’m not surprised to see some investors selling off their positions to try and mitigate potential losses. But has this market adjustment caused some UK shares to be too cheap? Let’s explore.

The power of rising uncertainty

Despite what the sharp drop in share prices would indicate, there’s little known information about the new variant. Having only been recently discovered, scientists are still trying to work out whether this is something to worry about.

As it stands, knowledge surrounding its transmissibility, symptom severity, and the effectiveness of vaccines are unknowns. And it’s possible that this variant, like several others before it, could simply fade away within a few months. Of course, the opposite could also be true, and it may be the worst strain yet.

Uncertainty and the stock market don’t exactly get along. And with some investors fearing the worst, volatility is on the rise as they rush to the exit gates. But as unpleasant as it is to see my portfolio move in the wrong direction, the panic may have created some substantial buying opportunities. Why? Because many UK shares caught in the selling crossfire are now looking rather cheap.

Finding the best cheap UK shares

Simply throwing my money at the businesses that suffered the largest drops these past few days is not a prudent strategy, in my opinion. After all, some of the biggest fallers are travel stocks. And most have a pretty unhealthy balance sheet after using debt to stay afloat during 2020. Not to mention that if Omicron turns out to be a disaster, the sector is likely to get pummelled.

Instead, I’m searching for cheap UK shares that may actually profit from another round of lockdowns, but can still thrive in a post-pandemic world. And one that might fit this description is Learning Technologies Group (LSE:LTG).

This tech stock hasn’t had the best run in the last six months. And the past few days have only continued this downward decline. But despite what the falling share price would indicate, the business could generate some explosive long-term growth.

LTG provides a remote learning platform for employees to complete training for almost any profession from the comfort of their homes. In a post-pandemic world, it’s possible that the demand for such solutions could fade away. However, given the cost-saving benefits for employers and the convenience factor for employees, I don’t think that will be the case.

The post Has Omicron created the biggest buying opportunity for cheap UK shares? appeared first on The Motley Fool UK.

The Covid-19 pandemic caused a market crash back in March 2020. Since then, many markets have recovered but, in my opinion, the amount of money flowing into markets has caused them to become bloated.

I am aware no one can truly predict when a stock market crash could occur or what it would actually look like. If I knew that, I would call myself Mystic Jabran and stand to make a lot of money! I am not Mystic Jabran, but I have identified three FTSE stocks I would seriously consider buying for my portfolio after a market crash, if it were to occur.

What is a stock market crash?

In order to get ahead of the curve, it is important to define a stock market crash and understand it as best I can. It is a rapid and usually unanticipated drop in stock prices. This is usually across worldwide markets, not just FTSE stocks.

So what causes a crash? Well, it can be a side effect of a major disaster or an economic crisis in a country or region. Another cause could be the collapse of a speculative bubble. A contributor to a crash, and perhaps not a direct reason, is investor panic. When this occurs, the public begins to panic sell which actually deepens the woes of stock prices.

Examples of famous stock market crashes include the 1929 Great Depression, Black Monday of 1987, the 2001 dotcom bubble bursting, the 2008 global financial crisis and the most recent Covid-19 pandemic related crash.

I must note that there isn’t actually a threshold or defined criteria that identifies a crash. It is generally considered an abrupt double-digit percentage drop in any index, such as the FTSE, over a period of a few days.

FTSE stocks I would consider

1. National Grid (LSE:NG.). If a market crash occurred, I would look at adding defensive stocks to my portfolio, and National Grid ticks that box nicely. These are stocks that hold up well in during a crash period, but at the same time won’t soar up too high when the market begins to rise. I would describe them as solid middle performers that have safe, non-volatile revenue streams. Energy and utility firms are usually considered defensive.

   I believe National Grid could be a good addition to my portfolio post-crash. It currently offers a dividend yield of over 3.5% which would make me a passive income. Dividends are not guaranteed, however. In addition to this, it is joining the clean energy race, which I like to see as a potential investor. It knows where the future lies and is making the necessary moves.

   The risk with National Grid is that its financials did suffer due to the pandemic related crash. Another crash could see similar results. This could affect any payout I would receive as an investor and as well as any recovery.

2. Unilever (LSE:ULVR). I think the consumer goods giant would be a good choice for my portfolio if the market crashed. Unilever has a plethora of home care, personal care, and health brands under its umbrella. It is also one of the top five FTSE stocks on the FTSE 100 index by market capitalisation. It is a powerhouse in terms of footprint, reach, and financials and could be a good stock market crash buy.

   Unilever has an earnings yield of over 4% and a dividend yield of 3.8%, which means it would make me a nice passive income too. Currently, Unilever is actually close to £10 down from its 52-week high, which means it is cheaper than usual. If a crash occurred it would cheapen further. Overall, however, Unilever is not a cheap FTSE stock right now in my opinion. I have always believed you pay for what you get and Unilever is a top quality FTSE stock in my eyes.

   The risk with Unilever is that an economic downturn could affect demand and hurt financials. Furthermore, there could be a change in consumer behaviour and preferences which could also hurt demand and financials. Overall, I like Unilever for my portfolio if there were a stock market crash.

3. Learning Technologies Group (LSE:LTG). Unlike my other two picks, LTG is not one of the leaders in its respective markets. I would consider this FTSE stock for its growth propensity. Prior to the 2020 crash, LTG was doing well but the demand for its services increased as remote working became the norm due to Covid-19.

   The LTG share price is trading at all-time highs of 226p per share. It has steadily increased over the years, more so since the crash. I would be able to pick up cheap shares if the share price crashed as a result of a market downturn. Its most recent half-year results showed increased revenue and net income. More tellingly for me, I noticed that demand for services had increased substantially as had its global reach and footprint. This could help it develop into a market leader in e-learning and training.

   The risk with Learning Technologies Group is that in times of a stock market crash, firms can tighten the purse strings. This cost cutting can lead to training being shelved or delayed. If this were to happen, it could affect LTG’s progress. Despite the risks, I would still buy LTG shares if a crash were to occur once more.

What I would do to prepare for the crash

I have identified three FTSE stocks I would buy for my portfolio if the market were to crash once more. I do have some steps to take in order to make sure I could capitalise on this as a savvy investor.

Firstly, I would make sure I have some cash ready to invest when and if a stock market crash occurred. With the cash ready, I would seriously consider two other aspects. These are quality and diversification. I would make sure I am investing in quality companies. To protect myself I would look to invest in a diverse set of companies. The examples above are all in different sectors. From utilities, to fast-moving consumer goods (FMCG), and technology.

The post If there were a stock market crash tomorrow, I would buy these 3 FTSE stocks! appeared first on The Motley Fool UK.

Stock market crash in 2021?

A stock market crash is a rapid decline in stock market prices. A market crash is generally understood to mean that prices of stocks in major indexes across the world drop by double-digit percentage points in a matter of days or weeks. 

A crash can happen for a variety of reasons. These include bad economic news, political events, or world disasters. An example of the latter was the Covid-19 pandemic, which caused a worldwide market crash last year.

The Covid-19 pandemic is not over and the world is still recovering from an economic, political, and humanitarian perspective. I must note that no one can accurately predict if another stock market crash will occur. I believe the economic damage caused by the last crash could lead to another.

One of my best shares to buy now

If there were to be another market crash, I have identified one stock I would be looking at. I believe the share price would drop offering me a bargain. I believe the share price would rise again, in time, and the firm’s performance would remain robust. This pick for my portfolio is based on a crash related to the pandemic and restrictions coming into force once more.

Learning Technologies Group (LSE:LTG) were already established in providing e-learning and training services to businesses prior to the first crash. Services have been in demand more than ever due to offices needing remote working. I believe tech stocks would have defensive attributes in this crash scenario and LTG could benefit.

As I write, shares in LTG are trading for 216p per share. This is a 68% increase on prices this time last year at 128p per share. It is currently trading at all-time highs.

In the most recent half-year results announced last week, LTG reported an increase in revenue and net income. More importantly for me, it confirmed a hike in demand and international footprint. I believe these trends could accelerate if the market crashed again for a similar reason. That’s why I have identified it as one of my best shares to buy if there’s another crash.

Risk and reward

Firstly, the risk of the pandemic causing further economic issues for firms means they may not prioritise training as the purse strings need to be tightened. This could affect LTG’s bottom line.

In addition, LTG has a track record for acquisitions which I usually like in a firm. However, it could over-extend itself. When an acquisition takes place there is a proportion of goodwill to total assets. In simple terms, this is the premium paid when acquiring another business. If there is a large portion of goodwill, this could indicate the acquisition is costing too much.

Overall, if the market were to crash in 2021, LTG is one of the best shares I would be looking at picking up cheap for my portfolio. I believe the reward would outweigh the risk involved.

The post This is one of the best shares to buy if the stock market crashes in 2021! appeared first on The Motley Fool UK.

There are two tech stocks already in my portfolio that look primed for long-term growth. And while they’re certainly not risk-free, I’m definitely considering buying more shares. Let’s take a look.

The rise of remote learning solutions

It’s no secret that having a talented workforce is essential for any business to succeed. But due to the pandemic, in-person training has been somewhat interrupted for the past year. Fortunately, Learning Technologies Group (LSE:LTG) was able to provide a solution.

The tech stock offers a comprehensive collection of learning software and services designed to be integrated with existing training pipelines. This makes it easier for businesses to transition their training methods. It also enables employees to improve their knowledge from the comfort of their living rooms.

LTG has managed to achieve some impressive growth in recent years. The continual expansion of its offerings has enabled the management team to grow its revenue by an average of 36% per year for the last five years. At the same time, the bottom line moved out of the red, with a loss of £1.3m in December 2016 but a profit of £17.4m in December 2020.

As promising as this growth is, it’s not without its risks. Digital learning solutions is a highly competitive and fragmented market. Consequently, the tech stock has been pursuing an acquisitive growth strategy as the sector begins to consolidate. However, acquisitions can lead to a rapid increase in unexpected costs and potentially destroy value rather than create it. Suppose the management team make a series of bad purchases? In that case, not only will the balance sheet begin to suffer, but the share price will as well.

The tech stock behind e-commerce sales

I think it’s fair to say that the world’s dependence on e-commerce has exploded recently. With UK lockdown restrictions preventing roughly 750,000 stores from opening their doors, many consumers went online to shop. In fact, this behaviour change is a primary contributing reason to why 85,000 businesses across the UK launched an online store in 2020.

But this sudden surge in online marketplaces creates a new problem. How do these firms drive customers to their online storefronts as opposed to those of competitors? Enter dotDigital (LSE:DOTD). The tech stock provides a software solution that automates the marketing process of online businesses. In other words, it tracks customer behaviour and interaction on a website. This data is then used to generate personalised marketing material distributed through multiple channels, including email, text messages, and social media. The end result is a higher visitor-to-customer conversion rate and increased retention for repeat purchases in the future.

As exciting as this technology may be, there is a looming regulatory threat on the horizon. The rising issue of online privacy led to the formation of the General Data Protection Regulation Act (GDPR) in Europe. This legislation significantly improved individual privacy protection for consumers. But it also created new barriers for dotDigital to overcome. While the business did manage to adapt, any further restrictions may begin to impede its impressive growth.

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