I was recently asked by a member of my family for some UK exposure to “data” companies. In the UK we have plenty of tech, especially those that are privately held, but not many “pure data” plays. However, there are plenty of companies that use data (and significant amounts of it) to make money.
Ideagen (#IDEA): Small (£700m) software company that provides a range of software solutions for “mundane” but essential business areas, this has a lot of growth potential and has a similar business model to AVEVA (very acquisitive) but with a lot more upside. They’ve consistently grown their recurring revenue and there share price has reflected such (400% in 5 years).
AVEVA (#AVV): You may have heard of them. They are the world leader in industrial software solutions and collect petabytes of data a day. Software relating to underground piping and power plant management etc. They have a wide moat and very unlikely to be surpassed due to the sheer amount of information they have. They probably won’t set your portfolio alight but should be fairly low-risk over the long term.
AVAST – The best run cybersecurity stocks in the UK that I know of, a much better product than the likes of Dark Trace and trades on a PE multiple of 27, pretty cheap for an industry that is only going to grow… . AVAST also pays a 2% dividend.
If I wanted to get some US exposure I would look at Palantir, who provide data analytics (and much more) to the US Government.
Think how well military contractors have performed over the years and the imagine what the future of warfare will look like… Palantir are set to capture much of the this upside whilst (in theory anyway) protecting helping to fight the bad guys. The other option in the US (I admit there are many) would be to look into data centre REITs.
Data-centre usage is expected to grow massively, even with leaps in technology that we main gain. One could look at something like Cyrus One ($CONE) or Digital Realty ($DLR) as a way to gain this exposure. If I was nearing retirement and wanted something that would expose me to the future but also pay an income that is where I would look.