Research Tree Research Tree Logo

  • Try our Investor Tool
  • Login
  • Sign Up

Research Tree Logo

  • Login
  • Sign Up
  • Features
  • Pricing
  • Reg.News
  • Contact
  • Try our Investor Tool
  • Login
  • Sign Up
  • Providers
  • Companies
⨯
LIVE

Event in Progress:

Join Here ×
  • Providers
  • Companies
⨯
  • Features
  • Pricing
  • Event Hub
  • Reg.News
  • Short Interest
  • Contact
Blogs >
Research Tree >
Our users' top Tech, Software, and Telecoms stocks for 2017
  • 24 Jan 17
title

Our users' top Tech, Software, and Telecoms stocks for 2017

  • 1644 views
James Valentine

Digital editor at Research Tree

 
Tech Stocks
Strap line

Whilst it's only early days, our users are already comfortably beating the market

Companies: BNN, IOM, IQE, LSF, MCRO, SPE, TRAK


Body

 

As explained below, here are some of Research Tree user's top picks in Tech/Software, Telecoms and Semiconductor sectors for 2017.

 

At the tail-end of 2016, we asked our core users for their stock picks for 2017 and their associated rationales. We had a fantastic response, and after receiving some excellent insights from a group of very clued-up investors, we decided to share some in a series of articles.

 

Research Tree users stock picks performance Jan 2017

 

As you can see, the picks as a group are significantly outperforming the FTSE All Share which is currently flat year-to-date, although it is admittedly still early days.

 

Our users are mostly Sophisticated or High Net Worth private investors, but we also have a growing number of professional investors and commentators.

 

We thought it would be a good idea to share some of their views and rationales. However, we got so many quality responses that we have had to split them broadly into sector groupings.

 

Below is a quick run through some of the picks in the Tech/Software, Telecoms and Semiconductor sectors.

 

 

Tech/Software

Tech stocks are an important part of any growth investor's portfolio. There are two key factors to look at when considering investing in growing tech companies: scalability and margins. 

 

Tech companies that are truly scalable see their margins improve over time as legacy costs are paid off and as acquisition costs decline with increasing brand recognition/popularity. Many of these stocks achieve growth and margins that are simply impossible for brick and mortar firms, hence their often sky-high valuations.

 

When we asked our users who they thought would do well this year we got some interesting insights on Microfocus, BNN Technologies, Sopheon, Iomart, and Trakm8. 

 

Microfocus was in the press a fair bit last year after its acquisition of HP's Enterprise division and, not surprisingly, was a pick for several of our users (and our CEO Rob!). One private investor said he believed it was in a good place to weather whatever 2017 could throw at it, as the firm is "insulated against currency risks" and other factors that could affect more consumer-sensitive stocks. 


Our CEO Rob, who also chose MCRO for one of his picks, said:

 

"What Mr Loosemore and his team have achieved at MicoFocus is highly impressive. I would back them to bring margins at HP Enterprise towards those of MicroFocus. Currently HPE has 20% EBITDA margins compared to MicroFocus margins of 46%. Indeed, MCRO bought HPE for 11.4x EBITDA. Bringing the margins fully in line would increase EBITDA from the new addition from $660m to $1.3bn which would drive significant earnings accretion. I’m not expecting MicroFocus to bring HPE completely in line with its established profitability, but if they achieve half that job then the acquisition was an absolute bargain."

Purplebricks is a high profile growth stock looking to disrupt the estate agency market. This is another of our CEO's picks and here's Rob's rationale 

 

"To disclose I own shares in PURP.


This is a classic example of a growth company where the multiples look crazy. However, in early December PURP announced it had crossed the EBITDA threshold, with profitabillity in H1 '17 and more revenue in H1 than the previous 12 months.


The size of the opportunity vs the current market cap is enormous. PURP only account for less than 3% of UK transactions and the opportunity in Australia is also significant. Estate agencies have been charging too high a fee for the service they provide in my view for a long time, and a platform offering like PURP could reshape the landscape.


The bull case is not that it takes over the market, like a Just Eat. That is too optimistic in my view. But in the process of reshaping the industry it is a reasonable position to assume PURP wins a decent market share. That would put it on a multiple of current valuations.


The upfront nature of the payments should mean PURP has a semi-negative working capital business model allowing organic investment of cash flow. It is marketing heavily and its competitors will find it hard to compete, especially given incumbent estate agencies are in effect marketing to maintain market share but erode margin."


BNN Technologies is a transactional database specialist which is currently in the process of dual-listing on the NASDAQ. One investor told us why he thinks it is a "blue sky" pick with "massive" potential:

 

"... [BNN has] pivoted away from a reliance on the (currently suspended) Chinese lottery into a deal with Xinhua news agency (government mouthpiece) in China to take a small commission on transactions going through the Xinhua app, ranging from utility bills to mobile top ups and parking fines."

Stockbroker Hybridan is also optimistic about BNN, saying in December that its entry to the fast-growing Chinese digital ad market was "significant", with further contracts and agreements expected before year-end. Hybridan also said the Nasdaq process is well advanced and the firm is investing heavily in R&D.

Sopheon is an Enterprise Innovation Management software specialist whose share price has increased more than 400% in the past 12 months. One of our users says he has held Sopheon since mid-2016 (nice work!), explaining his pick as being "very cheap" for a software company with a great product (Sopheon has a market cap of just £25m):

 

"I saw it spike earlier in the year and didn’t buy but after the results (in June I think) and a wave of big director buys, I thought it looked good. The interims were very strong and I hope that the second half of the year will see further contract wins.  Even at the current level I think it could be very cheap for a software company where the product really seems to be getting traction."

According to broker finnCap, Sopheon has seen a resurgence of momentum in the second half 2016, showing the opportunity for profitable growth.


Another of our users chose Cloud hosting Saas company Iomart as his safe pick for 2017. He told us the firm had consistently delivered good earnings growth and excellent cash generation: 

 

"The dividend has the capacity to keep growing at 25% plus alongside earnings and the prospective P/E looks reasonable compared to its equivalents." 

Iomart is up c.40% in the past 12 months but has remained relatively flat for 2017 so far.

The final tech stock is Trakm8 Holdings, a small-cap fleet management specialist who saw its share price tumble 50% in November after a hefty profit warning. According to one of Trakm8's investors, the firm is now in turnaround mode and announced a restructure in December that he believes "will bring the company back alive." He also believes the firm is an attractive acquisition target going forward.

 

 

Telecoms

The Telecoms sector looks like it's in for an action packed 2017, with 5G, the IoT, regulatory reform, security, and M&As featuring heavily. We received just one Telecoms pick from our users, Laird Plc.

 

Laird Plc is a high-tech telecoms company that provides systems, components and solutions to "protect electronics from electromagnetic interference and heat" whilst enabling connectivity in mission-critical wireless applications and antenna systems. Serious stuff.

 

"The company announced just before Christmas that it would be rebuilding its balance sheet with a rights issue in Q1 2017. Some may read this is as a veiled "for sale" sign for the company and therefore a speculative play. Only yesterday Alphaville reported that it could be an obvious Apple consolation play. Watch this space."


Semiconductors

Semiconductor specialist IQE manufacturers epitaxial wafers (whatever they are) for a wide range of technology applications for wireless, optoelectronic, electronic and solar devices. It has been on a bit of a streak with EPS growth averaging c.12% over the last 4 years, and are trading on around 13x forecast earnings.

 

"I chose IQE because the business is growing strongly and on a modest rating. I have held it since August or so. Given the forex change, it could also make an attractive takeover target."

IQE stocks increased 100% in 2016, and have had a fairly decent start to 2017.

 

-----

Read our users' picks across the other sectors here:

  • Construction, Support Services, and Financial Services stocks for 2017
  • Energy, Pharma, BioTech, and Publishing stocks for 2017
  • Bars & Eateries, Household Goods, and Clothing Retailer stocks for 2017

Please Note: This article is not intended to be advice or a recommendation to buy, sell or hold any investment mentioned, nor is it a research recommendation. Investors should form their own view in relation to any potential investment. 



Body Two

Body Three

Body Four

Body Five

The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.

More Content

More Content

Hybridan Small Cap Feast - 23 Mar 23

Companies: PMP EKF SRT AFC CLCO SPE CRDL OSI BOOM

Hybridan

iomart Group: Capital Markets Day

Companies: iomart Group plc

Research Tree

Morning Note – 23 March 2023

Companies: LPA SRT HDD SPE BOOM

finnCap

Most popular equity research this week | 26 - 29 Mar

Companies: IQEIGGCMCXBVXPCVRGMDSSYPLUSTRMRB90QRT

Research Tree

PROGRESSIVE: Sopheon - A year of strategic and product progress

Companies: Sopheon plc

Progressive Equity Research
next
 

Useful Links

  • Features
  • Pricing
  • RNS/Newswires Feeds
  • Providers Hub
  • Company Hub

Account

  • Login
  • Free Trial - Join Now
  • Contact
Follow us on Linkedin Follow us on Twitter

Share:

Copyright © 2023 Research Tree | All Rights Reserved. | Terms of Service and Privacy Policy and Statement on Cookies

Research Tree will never share your details with third parties for marketing purposes. Research Tree distributes research documents that have been produced and approved by Financial Conduct Authority (FCA) Authorised & Regulated firms as well as relevant content from non-authorised sources, who are not regulated but the information is in the public domain. For the avoidance of doubt Research Tree is not giving advice, nor has Research Tree validated any of the information.

Research Tree is an Appointed Representative of Sturgeon Ventures which is Authorised and Regulated by the Financial Conduct Authority.

Top
  • Home
  • Features
  • Pricing
  • Event Hub
  • Reg.News
  • Short Interest Tracker
  • Blogs
    • Academy
    • Insights
    • News
    • Research Tree
    • The Naked Fund Manager
  • Ideas & Picks
    • Ideas Hub
    • Stock Pick League
  • Explore Content
    • Regions
      • UK
      • Rest of EMEA
      • N America
      • APAC
      • LatAm
    • Exchanges
      • Aquis Apex
      • Australian Securities Exchange
      • Canadian Securities Exchange
      • Euronext Paris
      • London Stock Exchange (domestic)
      • SIX Swiss Exchange
    • Sectors
      • Automobile Industry
      • Banks
      • Building & Construction
      • Chemicals
      • Discretionary Personal Goods
      • Discretionary Retail
      • Energy
      • ETFs
      • Financial Services
      • Food & Drink
      • Food Production
      • Health
      • Household Goods & DIY
      • Industrial Equipment, Goods & Services
      • Insurance & Reinsurance
      • Investment Trusts
      • Leisure, Tourism & Travel
      • Media
      • Open-ended Funds
      • Other
      • Real Estate
      • Resources
      • Staple Retail
      • Technology
      • Telecoms
      • Utilities
    • AIC Sectors
      • Asia Pacific
      • Asia Pacific Equity Income
      • Asia Pacific Smaller Companies
      • Biotechnology & Healthcare
      • China / Greater China
      • Commodities & Natural Resources
      • Country Specialist
      • Debt - Direct Lending
      • Debt - Loans & Bonds
      • Debt - Structured Finance
      • Environmental
      • Europe
      • European Smaller Companies
      • Farmland & Forestry
      • Financials
      • Flexible Investment
      • Global
      • Global Emerging Markets
      • Global Equity Income
      • Global Smaller Companies
      • Growth Capital
      • Hedge Funds
      • India
      • Infrastructure
      • Infrastructure Securities
      • Insurance & Reinsurance Strategies
      • Japan
      • Japanese Smaller Companies
      • Latin America
      • Leasing
      • Liquidity Funds
      • North America
      • North American Smaller Companies
      • Private Equity
      • Property - Debt
      • Property - Europe
      • Property - Rest of World
      • Property - UK Commercial
      • Property - UK Logistics
      • Property - UK Residential
      • Property Securities
      • Renewable Energy Infrastructure
      • Technology & Media
      • UK All Companies
      • UK Equity & Bond Income
      • UK Equity Income
      • UK Smaller Companies
      • VCT AIM Quoted
      • VCT Generalist
      • VCT Generalist Pre Qualifying
      • VCT Specialist: Environmental
      • VCT Specialist: Environmental Pre Qualifying
      • VCT Specialist: Healthcare & Biotechnology
    • Trust Managers
      • 3i Group
      • 3i Investments
      • Aberforth Partners
      • abrdn
      • AEW UK Investment Management
      • Albion Capital
      • Allianz Global Investors
      • Alpha Real Capital
      • Amati Global Investors
      • Amedeo Air Four Plus
      • Apax Guernsey Managers
      • Aquila Capital Investment
      • Artemis Investment Management
      • Asset Value Investors
      • Athelney Trust
      • Atrato Partners Limited
      • Augmentum Capital
      • Axiom Alternative Investments
      • Baillie Gifford
      • Baker Steel Capital
      • Beringea
      • BlackRock Investment Management (UK)
      • Boussard & Gavaudan Asset Management
      • Brevan Howard Capital Management
      • Chelverton Asset Management
      • Columbia Threadneedle
      • CVC Credit Partners
      • Doric Partners
      • Ecofin
      • Fidelity
      • Foresight Group
      • Frostrow Capital
      • Fundsmith
      • Gravis Capital Management
      • Greencoat Capital
      • Gresham House
      • Hansa Capital Partners
      • Harwood Capital
      • ICM
      • InfraRed Capital Partners
      • Invesco Asset Management
      • J.P. Morgan Asset Management
      • Janus Henderson Investors
      • Jupiter Unit Trust Managers
      • KKV Investment Management
      • Liontrust Asset Management
      • Markel CATCo Investment Management
      • Maven Capital Partners
      • MD Barnard and Co
      • Mercia Asset Management
      • Montanaro Investment Managers
      • Neuberger Berman Europe
      • New City Investment Managers
      • Octopus Investments
      • Pantheon Ventures
      • Phoenix Asset Management
      • Polar Capital Holdings
      • Premier Miton
      • Puma Investments
      • Quaero Capital
      • Rampart Capital
      • Ravenscroft
      • Riverstone International
      • Schroder Investment Management
      • Schroder Real Estate Management
      • Seneca Investment Managers
      • Triple Point Investment Management
      • Tritax Management
      • Troy Asset Management
      • TwentyFour Asset Management
      • White Oak Capital Partners
      • Willis Towers Watson
      • YFM Private Equity
    • Small / Large Cap
      • UK100
      • UK250
      • UK Smallcap
      • UK Other Main Markets
      • Other
    • Private/EIS
      • EIS Single Company
      • EIS/SEIS Funds
      • IHT Products
      • SEIS Single Company
      • VCT Funds
  • Providers
    • Free/Commissioned
      • ACF Equity Research
      • Align Research
      • BRR Media
      • Calvine Partners
      • Capital Access Group
      • Checkpoint Partners
      • Clear Capital Markets
      • Couloir Capital
      • Doceo
      • Edison
      • Equity Development
      • eResearch
      • Fidante Partners
      • Five Minute Pitch TV
      • goetzpartners securities Limited
      • Hardman & Co
      • Inbound Capital
      • Independent Investment Research
      • InterAxS Global
      • Kepler | Trust Intelligence
      • London Stock Exchange
      • Magnitogorsk Iron and steel works
      • Mello Events
      • Mining Network
      • piworld.co.uk
      • Proactive
      • Progressive Equity Research
      • Quantum Research Group
      • QuotedData
      • RaaS - Research as a Service
      • Radnor Capital Partners
      • Research Tree
      • SEAL Advisors Ltd
      • ShareSoc
      • The AIC
      • Trinity Delta
      • UK Investor Group
      • Vox Markets
      • Yellowstone Advisory
    • High Net Worth Offering
      • Fox-Davies Capital
      • ACF Equity Research
      • Allenby Capital
      • AlphaValue
      • Alternative Resource Capital
      • Arctic Securities
      • Arden Partners
      • Auctus Advisors
      • Baptista Research
      • BNP Paribas Exane - Sponsored Research
      • Canaccord Genuity
      • Cenkos Securities
      • Couloir Capital
      • Dowgate Capital
      • finnCap
      • First Berlin
      • First Sentinel
      • Hannam & Partners
      • Hybridan
      • Kemeny Capital
      • Liberum
      • Longspur Research
      • Louis Capital
      • Magnitogorsk Iron and steel works
      • Medley Global Advisors
      • Northland Capital Partners
      • QuotedData Professional
      • Shard Capital
      • ShareSoc
      • Shore Capital
      • Singer Capital Markets
      • SP Angel
      • Stanford Capital Partners
      • Stifel FirstEnergy
      • Stockdale Securities
      • Tamesis Partners
      • The Life Sciences Division
      • VSA Capital
      • WHIreland
      • Whitman Howard
      • Yellowstone Advisory
      • Zeus Capital
    • Institutional Offering
      • Fox-Davies Capital
      • ACF Equity Research
      • Align Research
      • Allenby Capital
      • AlphaValue
      • Alternative Resource Capital
      • Arctic Securities
      • Arden Partners
      • Atrium Research
      • Auctus Advisors
      • Baptista Research
      • BNP Paribas Exane
      • BNP Paribas Exane - Sponsored Research
      • BRR Media
      • Bryan, Garnier & Co
      • Calderwood Capital
      • Calvine Partners
      • Canaccord Genuity
      • Capital Access Group
      • Cenkos Securities
      • Checkpoint Partners
      • Clear Capital Markets
      • Couloir Capital
      • Doceo
      • Dowgate Capital
      • Edison
      • Equity Development
      • eResearch
      • Fidante Partners
      • finnCap
      • First Berlin
      • First Sentinel
      • Five Minute Pitch TV
      • goetzpartners securities Limited
      • Hannam & Partners
      • Hardman & Co
      • Hybridan
      • Hypothesis Research
      • Inbound Capital
      • Independent Investment Research
      • InterAxS Global
      • Kemeny Capital
      • Kepler | Absolute Hedge
      • Kepler | Trust Intelligence
      • Liberum
      • London Stock Exchange
      • Longspur Research
      • Magnitogorsk Iron and steel works
      • Mello Events
      • Mining Network
      • Northland Capital Partners
      • Numis
      • Panmure Gordon
      • Peel Hunt
      • piworld.co.uk
      • Proactive
      • Progressive Equity Research
      • Quantum Research Group
      • QuotedData
      • RaaS - Research as a Service
      • Radnor Capital Partners
      • Research Tree
      • Resolve Research
      • SEAL Advisors Ltd
      • Shard Capital
      • ShareSoc
      • Shore Capital
      • SI Capital
      • Singer Capital Markets
      • SP Angel
      • Stanford Capital Partners
      • Stifel
      • Stifel FirstEnergy
      • StockBox Media
      • Stockdale Securities
      • Tamesis Partners
      • The AIC
      • The Life Sciences Division
      • Trinity Delta
      • UK Investor Group
      • Velocity Trade
      • Vox Markets
      • VSA Capital
      • WHIreland
      • Whitman Howard
      • Winterflood Securities
      • Yellowstone Advisory
      • Zeus Capital
    • Video/Audio Interviews
      • BRR Media
      • Capital Access Group
      • Couloir Capital
      • Doceo
      • Edison
      • Equity Development
      • Five Minute Pitch TV
      • Mining Network
      • piworld.co.uk
      • Proactive
      • QuotedData
      • RaaS - Research as a Service
      • Research Tree
      • UK Investor Group
      • Vox Markets
      • Yellowstone Advisory
    • Event Providers
      • Capital Access Group
      • Cenkos Securities
      • Couloir Capital
      • Edison
      • Equity Development
      • Hardman & Co
      • InterAxS Global
      • Kepler | Trust Intelligence
      • London Stock Exchange
      • Mello Events
      • piworld.co.uk
      • Proactive
      • QuotedData
      • Research Tree
      • ShareSoc
      • StockBox Media
      • The AIC
      • UK Investor Group
      • VSA Capital
      • Yellowstone Advisory
  • Contact
  • Sign Up
  • Sign In