2 tech stocks I’d buy today and one I’m avoiding

The UK might not be well-known for its technology stocks but there are two on my radar (and one I don’t believe in).

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The US stock market appears to be benefitting hugely from the amazing rise in technology stocks with Facebook, Amazon, Apple, Netflix and, of course, Microsoft all listed in the US.

However, UK technology stocks appear to have less of an impact on the market. So, should investors in the UK stop looking for good technology stocks? Or is it more about knowing exactly where to look?

Going on holiday

On The Beach Group (LSE: OTB) is the first stock that I would consider investing in. This online holiday booking website is both a travel stock and a tech one. It was founded in 2003 and has been steadily growing ever since. Future expectations are extremely high with analysts predicting that earnings per share will rise from £0.165 to £0.268 in the next few years. I see this as a very promising sign that the share price can grow further. 

I believe the share is currently quite a bargain at around 460p at the time of writing. Having said this, the dividend yield is low at only 0.7%, but that’s to be expected with a growth stock and investors could see this rising quickly thanks to the firm’s huge growth expectations in terms of revenue and earning per share for this year. I don’t think that we will see this stock affected by Brexit in the same way as other travel companies like Thomas Cook. On The Beach just gets customer deals and doesn’t run hotels or airplanes, giving it the leading edge over other travel websites thanks to the financial protection it offers customers.

Finding a dream home

Rightmove (LSE: RMV) is the next on my ‘to buy’ wishlist and is another tech-plus-a-speciality stock. Being the UK’s largest online real estate and property website, It has a lot going for it. During late April, the shares reached a new record high and have been climbing since, to around 553p currently. The current dividend yield stands at 1.21%, which isn’t the best in the world but again, isn’t bad for a growth share. 

Analysts’ forecasts predict that it will continue to improve with revenue said to increase by 8% this year. I see nothing but a bright future for the firm with it also saying that Brexit should have no negative effect on the business. Statistics back up this bold statement as traffic hit a record high on the website in April. The company continues to grow and I see as a strong share I’d buy for the long run.

Just don’t

One technology stock that I am currently avoiding like the plague is Just Eat (LSE: JE). It seems that the company was off to a great start, but could have potentially peaked just a little bit too early as sales already seem to be falling in comparison to last year’s growth.

Orders have only grown by 7.4% in the first three months of 2019 which is weak in comparison to the huge 24% increase a year ago. Management is blaming this on the warmer winter, but I do struggle to see how a slightly warmer winter can knock off a whole 16.6%! Many investors are feeling cynical about Just Eat and it’s easy to see why, with competitors such as Uber Eats, Deliveroo and Domino’s ready and waiting to fill its shoes. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

fional has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Apple, Facebook, Microsoft, and Netflix. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool UK has recommended Domino's Pizza, Just Eat, On The Beach, and Rightmove. 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.

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