Due to certain geopolitical and macroeconomic factors, some FTSE 100 stocks have fallen recently. Even before this price drop, some of these stocks were on my radar. One pick is Experian (LSE:EXPN). Here’s why I’d add the shares to my holdings.

Data is king

Experian is a global business services company that is best known for its credit checking operations. These enable consumers to identify and help manage their credit scores. I use Experian myself for this exact purpose.

Due to the pandemic, the explosion of online activity and e-commerce has meant the amount of data firms like Experian hold has been grown even further.

As I write, Experian shares are trading for 2,946p. At this time last year, the shares were trading for 2,565p, which is a 12% return over a 12-month period. The shares have dipped recently from 3,667p at the end of December to current levels. This is a 19% drop, which makes shares even more attractive right now.

Potential pitfalls

The competition in Experian’s market is intense. There are many services out there for consumers to be able to check their credit score. All these firms are vying for market dominance. If one of these were to get ahead of Experian, it could hurt performance and shareholder returns.

Tech stocks have recently been on a downward trajectory. These stocks have been falling on the FTSE 100 and other worldwide indexes. Due to current macroeconomic issues, many investors are selling high-growth tech stocks and looking to buy value and defensive stocks. Experian could see its shares fall even further yet, hurting investment viability.

A FTSE 100 stock I’d buy and hold

Data has been called the oil of the 21st century and firms that are able to capture, analyse, and capitalise on it are being compared to oil firms of the last century. Experian has a great reputation within its industry and an excellent profile backed up by some savvy marketing. Most importantly in this day and age, it has managed to steer clear of any data-related scandals that have tarred other firms reputation and balance sheet. Experian’s profile and brand are a big plus for me.

Experian has an excellent track record of performance, although I understand that past performance is not a guarantee of the future. I can see that revenue and gross profit have increased year on year for the past four years. Coming up to date, a Q3 report released last month made for good reading. Experian noted that Q3 performance was at the “upper end of expectations”. This led to a full-year forecast of revenue growth between 16% and 17%.

Experian also pays a dividend, which would make me a passive income too. In fact, last month, it confirmed its first interim dividend of $0.16 cents. Its dividend yield is still below the FTSE 100 average of 3%, however.

Overall I think Experian shares could be a good buy for my holdings, especially at current levels. Its position in the market, profile and brand, as well as performance, growth levels to date, and growth potential are exciting for me. I will keep a keen eye on developments and look forward to full-year results in the next few months.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Experian. 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.

The Dr Martens (LSE: DOCS) share price was under the cosh again this morning. By noon, the value of the company had tumbled another 12%. What on earth’s going on?

Why investors are walking away 

As one might expect, this isn’t just some random capitulation. Today’s trading update contained what I believe to be pretty worrying news for investors. 

Not that this was immediately apparent. After all, revenue rose 11% to £307m in Q3 — up from £275.6m over the same period in 2020. Direct-to-consumer sales came in 33% higher — a record for the company. Retail sales were particularly buoyant and benefited from more people striding into the stores in October and November.

“So, what’s the problem?“, you might ask. Well, that 11% mentioned above is actually down on the 16% growth achieved in the first half of its financial year. The reason for this probably won’t come as a surprise.

Like many other listed businesses, ongoing supply chain issues are starting to kick Dr Martens where it hurts. A move to prioritise the higher-margin DTC trading led to a 14% reduction at its wholesale arm. So, the company has essentially taken one step forward and one step back.

To make matters worse, revenue in the Asia Pacific region fell by 28% due to Covid-19 restrictions in countries such as China and Australia.

Has the Dr Martens share price fallen too far?

The Dr Marten share price hit a record low of 266p earlier today. Is this simply a case of the market over-reacting? Could the bootmaker turn out to be a canny contrarian buy in time? 

Well, no one knows where share prices will go in the near term. However, my gut tells me that things might get worse before they get better, especially as the company said today that February and March are regarded as “quieter trading months“. Regardless of how confident it is in being able to meet current expectations for its full year, that’s hardly bullish talk. Oh, and the latter is only the case if there is “no significant Covid impact in Q4“. Now, I’m as hopeful as the next person that we’ve reached the pandemic’s endgame. I wouldn’t like to bet on it though. 

For balance, I do recognise this is a brand loved by millions of people around the world. And it’s clear that the company is holding its own online. Sales here made up 39% of the total mix in Q3; that’s far higher than it used to be just a couple of years ago. Year-on-year e-commerce revenue also climbed 16% in the quarter, despite a “tough comparative“. 

Is this enough though? I don’t think it is. Just knowing that I don’t replace my own pair of boots very often is sufficient to make me question the investment case here. And the £2.9bn cap valuation.

Falling knife

I questioned the valuation of Dr Martens not long after it came to market almost exactly one year ago. Today’s update only serves to make me even more bearish. The shares may be down 36% from where they were one year ago but I think they could get even cheaper, especially with the company’s peak trading period now behind it.

Regardless of how highly I rate its products, Dr Martens looks to me like a falling knife. I won’t be attempting to catch it.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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Some UK shares have seen a lot of volatility in the last couple of weeks. Whether it’s because of inflation or supply chain disruptions, the rising level of uncertainty has been quite unpleasant to watch. Yet even during this time of chaos, I’ve found two stocks that stand out to me as no-brainer investments for my portfolio. Let’s dive in.

The UK share profiting from inflation

Inflation is obviously bad news for consumers. After all, the rising cost of living doesn’t exactly help protect or build wealth. But in the case of banking, this is actually fantastic news. Why? Because when inflation is on the rise, the Bank of England can and is raising interest rates to counter this effect. Consequently, banks like Lloyds (LSE:LLOY) can start charging higher interest on the loans they issue to businesses and individuals alike.

While it’s a bit more complicated than that in practice, the end result is increased profit margins on all lending activity. And since Lloyds generates nearly 75% of its gross income through issuing loans like mortgages, this could mean its bottom line is about to seriously expand.

This is not guaranteed, of course. There are still many companies limping on with the ongoing devastation of the pandemic. And it’s possible the increase in interest rates could lead to a rise in defaults. Needless to say, that could quickly eliminate the benefit of the wider margins, sending the UK share plummeting in the process.

Despite this risk, I think the favourable change in the lending environment could yield a lot of rewards for my portfolio. Hence why I believe this stock is a no-brainer investment. But it’s not the only one on my radar.

More bricks are needed

Ibstock (LSE:IBST) hasn’t had the best of runs lately. With the pandemic causing building projects to be delayed, the brickmaker saw revenues plummet by double-digits in 2020 — falling by nearly 25%.

Since then, the situation has improved. In the latest earnings report, management stated demand for its construction materials is on the rise. And that’s despite the price inflation of clay caused by the supply chain disruptions. This means management was successfully able to pass on this cost to customers.

Consequently, total sales for the whole of 2021 are expected to be around £409m. That’s 29% higher versus 2020 and is in line with pre-pandemic levels.

There are still some unknowns surrounding this business. Shortages of HGV drivers continue to pose potential problems when delivering products to a construction site. Meanwhile, if the housing market starts to slow due to rising interest rates, it could reduce buying activity. This would subsequently lead to fewer construction projects, which in turn, would lead to a drop in demand for Ibstock’s products.

That would obviously be bad news for the share price of this UK business. But over the long term, I don’t think the demand for housing is likely to disappear. Therefore I believe this is a risk worth taking for my portfolio.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Ibstock and Lloyds Banking 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.

Big investors own almost 70% of the shares of software company Idox (LSE: IDOX). The list of big holders includes Soros Fund Management and others. And last year Idox was the focus of a takeover approach from an outfit called Dye & Durham Limited.

However, the deal didn’t go through. And that was because the Idox directors thought better value would flow to shareholders if the company remained independent.

Steady trading and growth

I think all the interest shown underlines the value the business has as a growth proposition. The sector is steady — the company supplies specialist information management software and solutions to the public and “asset-intensive” sectors.

For example, Idox builds software for government and industry to help its customers comply with regulations. Areas include the management of planning, building control, environmental health, licensing procedures and elections. And Idox software aims to encourage collaboration in social services departments and it also “brings health service information together”.

On top of that, Idox makes software for facilities (property) management and engineering information management for large-scale, complex capital projects.

Meanwhile, the share price rose by about 27% over the past year and trading has been going well. Today’s full-year report covers the 12 months to 31 October 2021. And the banner headline is ‘Another year of strong financial performance and strategic and operational progress’.

Revenue from continuing operations increased by 9% compared to the figure a year ago. And of that, 5% came from organic growth with recurring revenue increasing by 2% to just over £36m.

That means recurring revenue is now around 58% of the total. And it’s what I’d describe as ‘sleep-at-night’ revenue. If customers keep coming back year after year to continue or renew contracts, profits and cash flows can become steady and predictable. And I reckon that’s one of the main reasons institutional interest in the stock is so high.

Rising profits and an optimistic outlook

Meanwhile, the company’s been doing a good job converting revenue into profits. Operating profit shot up by 90%, adjusted EBITDA rose by 13% and adjusted diluted earnings per share increased by 54%.

During the year, Idox disposed of its Content business, gaining net proceeds of almost £11m. And that was offset by three bolt-on acquisitions costing £11.5m. I reckon it’s good to see such nipping and tucking because it suggests managers are focused on optimising the operations of the business. Meanwhile, in another positive indicator, net debt reduced by 50% to just over £8m.

The directors raised the final dividend for the year by just over 33%. And, looking ahead, chief executive David Meaden said the outlook for the business “remains strong”.

City analysts have pencilled in an increase in earnings of about 28% for the current trading year to October 2022. But there’s no guarantee the business will achieve assumptions. Operational challenges could arise to derail progress. However, set against that estimate and with the share price near 67p, the forward-looking earnings multiple is around 24.

That’s not cheap. And valuation could add another risk for investors here. Nevertheless, I’d buy the stock now to hold for the long term as the ongoing growth story continues to unfold.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Over the last five years, Scottish Mortgage Investment Trust (LSE:SMT) has been a fantastic stock to own. In fact, the share price has climbed over 200% during this period. Yet, in the last couple of months, performance has been pretty abysmal. Since last November, the stock has lost nearly 30% of its price. What’s going on? And is this an investment I want to make for my portfolio?

Getting walloped by the growth market sell-off

Despite having a fairly diversified portfolio of stocks under its belt, Scottish Mortgage Investment Trust can thank most of its impressive historical performance to a handful of companies like Tesla, Moderna, and Nvidia.

Unfortunately, that’s also the reason why the stock has taken such a brutal hit of late. With rising uncertainty about the pandemic, inflation, and a growing geopolitical situation in Eastern Europe, volatility is on the rise. And some of the first shares to be hit are those with the loftiest valuations.

Looking at the individual performances of these three stocks, they are each down 22%, 54%, and 12%, respectively, since November. Given that the share price of Scottish Mortgage Investment Trust is driven by the underlying performance of its assets, I’m not surprised to see it take a similar double-digit hit. And I doubt this will change while investor uncertainty continues to plague the stock market.

A slice of optimism

Despite this short-term volatility, the investment managers and analysts running the show in the background have a pretty impressive track record of identifying high-growth opportunities early on.

There is obviously no guarantee that past performance can or will be replicated in the future. But I remain optimistic that the same expertise can leverage today’s volatility to generate even more long-term growth and value for patient investors.

What’s more, the recent decline has pushed Scottish Mortgage Investment Trust’s valuation below the net asset value of its portfolio. Admittedly, the discount is only a measly 1.8%. But it serves as a further indicator that panicking investors may be overselling positions.

Time to buy?

Buying shares in Scottish Mortgage Investment Trust is the equivalent of making an investment in each of the businesses in its portfolio. This can be quite an advantageous approach to investing, as it automatically improves portfolio diversification despite being a single position. And opens the opportunity to invest in promising private businesses as well.

However, as I said earlier, the share price of this trust is ultimately driven by the underlying performance of its portfolio. And despite the rapid decline seen in its top-10 holdings, there are several businesses that continue to trade at pretty lofty valuations.

As such, I think further price declines could lie ahead in the coming months. Therefore, I’m keeping Scottish Mortgage Investment Trust on my watchlist for now.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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As the world slowly shifts away from its dependence on fossil fuels, renewable energy stocks are receiving increased interest from investors. There are countless businesses operating within this space. And in the end, not all of them are going to be winners.

But let’s take a look at one company I think will thrive and another whose fate is still unknown.

Wind power growth

In 2020, the UK government unveiled its Green Industrial Revolution. As part of this plan, an additional 40GW of offshore wind farms will be constructed. If successful, that’s enough to power roughly 12 million homes, or half of all households in the country.

This government tailwind is terrific news for renewable energy stock Greencoat UK Wind (LSE:UKW). This business has an expanding portfolio of on- and offshore wind farms that generate the bottom line. With increased investment into the space, management could easily find new opportunities to expand and deliver value as well as dividends to shareholders over the long term.

Like all investments, Greencoat has its risks. Most notably is the lack of pricing power. As energy prices are regulated, the company has next-to-no control over how much it can charge for its green energy. Suppose price caps are dropped again in the future. In that case, profit margins will likely get squeezed as operations have a largely fixed cost.

Personally, I feel this is a risk worth taking. While watching profitability get squeezed is unpleasant, the group currently has an operating margin of 87%. At this level, I think the company can withstand a fair amount of pressure. Therefore, I’m tempted to add this UK renewable energy stock to my portfolio.

A renewable energy stock I’d avoid today

The rise of green energy isn’t limited to just electricity generation. AFC Energy (LSE:AFC) is an expert in alkaline fuel cell technology that can be used to power buildings as well as vehicles. There are other companies like it. However, what gives this group the competitive edge is its patented technology to use lower-purity hydrogen fuel without any loss of efficiency.

That certainly sounds promising to me. So why am I avoiding it? While the technology may be proven, the same cannot be said for the business.

As it stands, AFC Energy doesn’t have any meaningful revenue. In December 2021, management announced the group had secured £4.5m worth of commercial agreements. This is undoubtedly a step in the right direction. However, compared to its £262m market capitalisation, the renewable energy stock seems to be disconnected from its fundamentals, in my opinion.

Needless to say, when a valuation is driven by expectation, it can open the door to a lot of volatility. And that’s not something I’m interested in adding to my portfolio today. Therefore, I’ll be keeping this renewable energy stock on my watchlist for now.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. 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.

Key Points

• Tech stock prices have been slashed by double-digits as uncertainty rises throughout the market, but it may have created fantastic buying opportunities
• One UK tech stock is enabling e-commerce stores to automate their marketing campaigns
• Another business is watching its revenues fly as demand for e-learning solutions remains strong, despite the pandemic slowly coming to an end

It’s been a rough couple of months for tech stock investors. With uncertainty growing in the markets, shares carrying lofty valuations have been punished quite harshly. But in some circumstances, investors may have gone overboard with their selling activity.

I’ve spotted two tech stocks that have suffered double-digit declines over the last five months, despite the businesses seemingly performing rather well. This, to me, looks like a buying opportunity, so let’s explore.

The tech stock driving online sales

With the adoption of e-commerce being accelerated courtesy of the pandemic, the number of online stores has skyrocketed. After all, thanks to platforms like Shopify, setting up an online retail business no longer has the massive barriers to entry that it used to.

But the increased level of competition is making it challenging for businesses to acquire new customers. That’s where dotDigital (LSE:DOTD) steps in. The company provides a cloud-based marketing platform that enables businesses to automate their advertising campaigns. By sending custom-tailored content across social media, email, and text messages, curious website visitors can be more easily converted into paying customers.

A lot of the group’s recent tumble is attributable to its high valuation. Even today, the tech stock still trades at a lofty price-to-earnings ratio of 45. And if further uncertainty enters the market, the recent volatility will likely continue.

However, given that the global market for digital advertising is expected to reach $786bn (£584bn) by 2026, I think this is a risk worth taking for my portfolio due to the potential reward.

Is the era of remote learning over?

The pandemic is ongoing. But with vaccines being distributed worldwide, normality is slowly returning to the working lifestyle. This has led to many investors believing Learning Technologies Group (LSE:LTG), a provider of e-learning solutions, could soon be in trouble.

Yet despite these fears and the subsequent decline of its share price, the company seems to be thriving. In its latest trading update, its performance came in better than analyst expectations, with revenues reaching as high as £254m. That’s nearly double what was generated at the height of the pandemic.

To me, this looks like demand for the company’s services remains elevated, despite the easing of lockdown restrictions. I will admit, it’s too soon to tell whether the boost in performance can be sustained in the long term. And if growth does begin to slow once the pandemic ends, it could send the tech stock further in the wrong direction.

But having said that, I remain optimistic. Why? Because e-learning solutions have introduced considerable cost savings for businesses that I doubt many are keen to give up. And that’s why I believe LTG’s recent tumble could be an excellent buying opportunity for my portfolio.

Zaven Boyrazian owns Learning Technologies, Shopify, and dotDigital Group. The Motley Fool UK has recommended Learning Technologies, Shopify, and dotDigital 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.

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