4 tech innovators in the FTSE 350

Four FTSE firms — including two nods for the same company! — each in a different sector, all with one cutting edge.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Even in this fast-moving world of ours, the last 12 months have stood out as seeing significant evolution in the field of technology. It’s not just the NASDAQ that’s home to the leading innovators, however! Brits can look closer to home, nestled in amongst the Footsie and FTSE 250…

Halma

What it does: Halma is a life-saving technology company committed to growing a safer, cleaner, and healthier future. 

Created with Highcharts 11.4.3Halma Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

By Paul Summers. I’d rather buy stock in a tech innovator whose products are essential rather than just desirable. FTSE 100 member Halma (LSE: HLMA) fits the bill nicely.

A group of around 45 companies, Halma produces safety technologies for industrial and logistics operations, monitoring and protecting the environment and enhancing the quality of care delivered by healthcare providers. 

I don’t know about you but I can’t see demand for these falling away. I therefore fully expect the company to continue raising its dividend by 5% or more every year for the foreseeable future, just as it’s done for the last 44 years!

The drawback to all this is that Halma stock never trades on a low earnings multiple. That said, I reckon the ongoing (but probably temporary) aversion to growth-focused companies among UK investors provides me with as good an opportunity as any to get involved.  

Paul Summers has no position in Halma

RELX

What it does: RELX is a global provider of information-based analytics and decision tools for professional and business customers.

Created with Highcharts 11.4.3RELX PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

By Andrew Mackie. My Stocks and Shares ISA remains relatively underexposed to the tech sector. This is mostly due to the rich valuations across the board. However, I do invest in tech businesses where I see a clear competitive advantage. RELX (LSE: REL) is one such tech innovator.

Its powerful datasets across risk, legal and insurance are being continually upgraded with AI tools. Launched last October, Lexis + AI is likely to be a game-changer for the legal profession. This solution offers conversational search, intelligent legal drafting, insightful summarisation, and document upload and analysis capabilities.

Its Risk division is another area primed for explosive growth over the coming decade. Financial crime compliance and digital fraud are two such areas. But equally important is insurance risk. Its proprietary data analytics and decision tools enable insurance businesses to improve their offerings across the value chain.

RELX isn’t a cheap stock, with a trailing price-to-earnings multiple of 36. Should the euphoria over AI diminish, its share price will likely fall. But as an investor who takes a long-term view, I remain bullish on its prospects.

Andrew Mackie owns shares in RELX.

RELX

What it does: RELX is a global provider of information and data analytics for customers across the scientific, medical and legal professions.

Created with Highcharts 11.4.3RELX PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

By Ben McPoland. FTSE 100 data firm RELX (LSE: REL) is fully embracing the huge potential of new technology and has already launched generative AI in its LexisNexis legal business.

This Lexis+ AI solution features conversational search, intelligent legal drafting and summarisation, and document upload and analysis capabilities. Because it is grounded in RELX’s vast repository of legal information, the risk of invented content (hallucinations) is massively reduced.

CFO Nick Luff said this AI tool is already creating “significant efficiency gains, whether summarising documents, conducting research, legal research or drafting court submissions.”

Last year, the firm’s adjusted operating profit grew 13% to £3.03bn on revenue of £9.16bn (up 8%). And this year the company has launched a conversational AI product in its scientific, technical and medical unit, which will support clinicians in delivering high-quality patient care. 

The stock isn’t cheap trading at 27 times forward earnings, which potentially adds some valuation risk.

However, given the fact that generative AI is set to reinforce RELX’s business model, I reckon this innovative FTSE firm deserves a premium valuation.

Ben McPoland does not own shares in RELX.  

S4 Capital

What it does: S4 Capital is a digital media advertising agency network based in the UK, with operations worldwide.

Created with Highcharts 11.4.3S4 Capital Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

By Christopher Ruane. Owning shares in S4 Capital (LSE: SFOR) has led to me nursing a sizeable paper loss. Directors own a large proportion of the shares but have largely not been buying lately, despite the share price collapsing by almost two thirds over the past year.

Despite that, I do see S4 as a tech innovator. Its digital-only model in the massive global advertising industry means that it is designed for what the marketing world looks like now rather than in the past.

So why have the shares been falling?

Past accounting delays have shaken City confidence in the company’s management, although it has made positive strides in that direction. The company is lossmaking. It has added debt to its balance sheet in recent years.

Clearly, this stock has risks. But I expect debt to fall and cost control could help move the company to profit. Its valuation looks cheap for the potential and I continue to hold.

Christopher Ruane owns shares in S4 Capital.

Sage Group

What it does: Sage Group supplies integrated accounting, payroll and human resources services mainly to small- and medium-sized companies.

Created with Highcharts 11.4.3Sage Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

By Royston Wild. Over the past 43 years, Sage Group (LSE:SGE) has steadily evolved its services to become one of the world’s top five enterprise resource planning (ERP) providers.

The FTSE 100 firm’s bread and butter is the supply of accounting and payroll software. And it is now investing heavily in artificial intelligence (AI) to enhance the functionality of its cloud-based services.

It recently launched Sage Network Inbox and Sage Copilot, the first tools in the company’s stable to make use of generative AI. Chief executive Steve Hare has predicted that machine thinking will “change the nature” of accounting, and the firm is seeking to put itself at the forefront of this revolution.

Sage’s share price has soared during the past 12 months. And this leaves it trading on a forward price-to-earnings (P/E) ratio north of 35 times.

High multiples like this are common among tech stocks. But remember that elevated numbers like Sage’s also make a price correction more likely if bad news comes along that spooks the market.

Royston Wild does not own shares in Sage Group.

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.

The Motley Fool UK has recommended Halma Plc, RELX, and Sage Group Plc. 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.

More on Investing Articles

Investing Articles

Here’s how Warren Buffett’s 2024 letter to shareholders can teach us to be better investors

The latest 2024 letter from Warren Buffett is a bit shorter than previous ones, but it's still packed with words…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

Only 28% of Gen X are on track for a comfortable retirement! Could buying UK stocks help?

Looking for ways to supercharge your retirement fund? Investing in UK stocks is one path I think deserves serious consideration.

Read more »

Investing Articles

Here’s the 1 thing everyday FTSE investors have over billionaire fund managers

Our writer discusses a key advantage that retail FTSE investors with Stocks and Shares ISA accounts have in the stock…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Are Tesco shares the ultimate FTSE ‘Steady Eddie’?

Harvey Jones says watching Tesco shares climb steadily upwards is balm for the soul. But will the FTSE 100 grocer…

Read more »

Investing Articles

These 5 problems could hit the Barclays, NatWest, and Lloyds share prices in 2025!

The Barclays, NatWest, and Lloyds share prices have surged between 55% and 102% over the last 12 months. But could…

Read more »

Investing Articles

Up 18% in February! Should investors consider this for their Stocks and Shares ISA in March?

Harvey Jones wonders if soaraway FTSE 100 bank Standard Chartered would made a nice addition to a balanced Stocks and…

Read more »

Mature people enjoying time together during road trip
Investing For Beginners

Have money in a Cash ISA? Here are 3 reasons to consider investing in the stock market instead

History shows that over the long term, the stock market tends to deliver much better returns than the interest from…

Read more »

Investing Articles

What on earth is going on with the Nvidia share price lately?

The Nvidia share price has been all over the place in February. Does this tempt our writer to add the…

Read more »