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Best shares to buy now: 5 stocks I’d snap up

·3-min read
A Lloyds tech engineer works on the bank's digital platform

I think some of the best shares to buy now are tech-focused companies. As the world becomes more interconnected, I reckon the demand for technology and related services will only grow.

With that in mind, here are five tech stocks I’d snap up right now.

Best shares to buy

The first two companies on my list are Alfa Financial Software Holdings and Sage. Both of these enterprises provide what I’d call mission-critical software.

Anyone who has owned a business will know accounting software is an essential tool for managing an enterprise’s finances. Its position in this sector has helped Sage grow to become one of the largest technology companies in the UK.

Meanwhile, Alfa develops and produces software for the asset finance industry.

Both companies benefit from the fact that, for many businesses, it’s difficult to change software providers when they’re already ingrained in an organisation. I think this is their most significant competitive advantage, and it’s the primary reason why I believe these are some of the best shares to buy now.

That’s why I would buy the stocks for my portfolio. The biggest challenge they currently face is the threat from larger peers, especially companies from the United States. These groups have more substantial balance sheets and more cash to spend on marketing, making them fierce competitors.

Consumer technology

As well as increasing demand for technology in the business sector, demand from consumers is also growing. I think Dixons Carphone and Spirent are some of the best shares to buy now to invest in this theme.

Dixons provides the tech to consumers, while Spirent’s technology is used in 5G mobile networks worldwide. I’d buy these two stocks because I think they offer a great way to invest in both parts of the market.

In the first quarter of 2021, Spirent secured more than 180 5G technology deals from more than 80 different customers. It’s investing heavily to increase its market share and improve its technological expertise.

Dixons is also reporting strong demand for its technology. Group electrical sales increased 14% in the 51 weeks to 24 April, with online sales more than doubling for the year.

The main risk hanging over these companies’ outlooks is competition. Spirent has to compete with heavyweight infrastructure providers such as Nokia, while Dixons has to fight off mobile operators such as O2. A price war could hold back growth at both organisations.

Cybercrime

The final company on my list of the best shares to buy now in the technology sector is Avast. Cybercrime has exploded over the past 12 months, and demand for cybersecurity software is following suit. In its first quarter, Avast reported a near 11% increase in revenues.

The company expects growth to moderate throughout the rest of the year as it invests more in research and development. This is the biggest challenge the group currently faces. Without this investment, it could fall behind in the arms race and potentially lose customers.

Despite this risk, I’d buy the stock from my portfolio of tech shares today.

The post Best shares to buy now: 5 stocks I’d snap up appeared first on The Motley Fool UK.

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Avast Plc and Sage Group. 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.

Motley Fool UK 2021

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