Oxford Nanopore (LSE:ONT) went public back in September last year. Since the launch price of the IPO was 425p, it has offered the early investors a very healthy short-term return. With a price at the moment of 553p, that’s a 30% gain. The Oxford Nanopore share price topped out at 736p last month, before stumbling lower. So is it a stock that I should consider buying now?

Initial buzz around shares fading

The business garnered a lot of attention due to the nature of its operations. It’s a medical company that develops and sells nanopore sequencing technology. It takes DNA and RNA code and uses the sequencing technology to identify organisms. It doesn’t just identify things, but can also be used to show if something is harmful or not, and what attributes it contains.

This is very useful information and technology. With a particular focus on identifying viruses, it’s clear that demand for this will be high not just at the moment but in years to come.

Unfortunately, the share price hasn’t been able to share such optimism after the initial bump higher. I think part of this is down to the fact that some of the buzz was simply due to the UK having a large biotech listing. After the initial few weeks, I think some investors realised there was a disconnect between the valuation and the share price. 

For example, in a recent trading update, revenue for the full-year 2021 is expected to be “above” £126m. For arguments sake, let’s call it £126m. With a market capitalization of £4.4bn, this gives a price-to-sales ratio of almost 35 times. This makes the Oxford Nanopore share price look expensive to me.

Reasons to like the Oxford Nanopore share price

Despite the valuation, there are reasons to see the current share price as a good entry point. Firstly, the business is growing. In the recent update, it noted that “the Group expects to report core Life Science Research Tools (“LSRT”) above £120 million, compared to LSRT revenue of £65.5 million in FY20, representing annual growth in excess of 83%”.

Given that the business is gaining traction, a continuation of those kind of growth figures over the next year would be positive for the share price. If investors are happy to look to the potential profits years down the line, then current valuation metrics aren’t as important.

Aside from the financial growth, another reason to buy is as a defensive stock against Covid-19. The business did have contracts with the government last year with tests, which has now ended. However, if we see further serious mutations of the virus, then Oxford Nanopore could benefit from new contracts. Holding the stock could help my overall portfolio in case the other stocks fall on negative Covid-19 news later this year.

From a traditional view, the Oxford Nanopore share price doesn’t look like a bargain at 553p. However, if I believe in the long-term growth prospects, or the use of the stock as a defensive play for Covid-19, it could hold value. Ultimately, I’m not convinced, so won’t be investing.

Jon Smith and The Motley Fool UK have 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.

A prime example of a burgeoning tech stock that you might not have heard of is K3 Business Technology (LSE:KBT). Should I add the shares to my portfolio at current levels? Let’s take a look.

Tech stocks on the rise

One of the fastest growing areas of technology is cloud computing. Data shows the cloud computing market is expected to grow at a annual growth rate of 16.3% between 2021 and 2026. K3 creates and sells IT-related products and software, predominantly using cloud computing tech, to improve efficiency in business operations.

As I write, shares in K3 are trading for 167p per share. At this time last year, the shares were trading for 119p, which is a 40% increase. 2021 was a good year for the K3 share price overall. The share price increased by nearly 70% from January 2021 to 2022. Many tech stocks have benefited from the pandemic-related need for tech and have seen share prices and performance increase steadily. 

Why I like K3 shares

K3’s performance of late has been consistent and it seems to have turned its fortunes around from a few years ago when it recorded losses and there were profit warnings. In a positive trading update provided in December for the second half of the financial year ended 30 November 2021, K3 was bullish about full-year results as well. It said performance for H2 was in line with expectations and mentioned lots of key new client wins which would boost performance.

One of the other reasons I like K3 is its current healthy balance sheet. In the latest update, it confirmed net cash was £9m. This was more than double the level six months prior and even more so since the same time last year when the firm was in the red. When a firm is able to clear debt and accumulate cash, I see it as a positive. Many tech stocks prioritise re-investing in new tech and products to stay ahead of the curve. A healthy balance sheet enables this.

Finally, insiders own shares of K3. I personally am a big fan of insiders owning shares in a firm. Legendary investor Peter Lynch once said: “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise”.

Risks and my verdict

K3 seems to have some momentum right now but issues could arise affecting its progress and performance. It has previously hit a sticky patch and failed to win major deals it expected to and recorded losses. There is the real risk this could occur once more. In addition to this, K3 is not exactly a household name. What I mean here is that despite its impressive client list and product stack, larger, more established competition in the tech world could beat it to the punch in terms of winning customers and producing cutting edge technology too.

Right now I really like K3 shares and would add some to my portfolio. It would be easy to buy shares in a big tech stock but sometimes these small cap gems can really take off over the longer term. K3 could be one such stock, especially with the rise in demand for cloud computing solutions in recent times.

Jabran Khan 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.

On the lookout for the best UK shares for my portfolio, I pay attention when insiders own lots of shares in a firm. This seems to be the case with TPXimpact Holdings (LSE:TPX). Should I look to add some shares to my holdings too? Let’s take a closer look.

IT services provider

There is a high likelihood you may not have heard the name TPXimpact Holdings before. This is because until late last year, the company was known as Panoply. TPXimpact provides IT services to governmental departments, the public sector, and charities. It does this through the use of cutting edge AI-driven technology.

TPXimpact only floated on the FTSE AIM in late 2018 for just over 80p per share. As I write, shares are currently trading for 242p, which is close to a 200% increase! In 2021 alone, the shares increased by 25%. With insiders owning shares and some clear momentum, let’s decide if I should add some shares to my portfolio.

For and against

FOR: TPXimpact’s management team is a positive for me. It was founded by entrepreneur Neal Gandhi and Oliver Rigby. Gandhi has experience of tech firms as he previously co-founded four firms and sold them for a healthy profit. He is also the largest shareholder in TPXimpact. When insiders own shares, this buoys my own investment case. Those running the firm usually invest their money if they believe the share price is on the rise and performance will match it.

AGAINST: Competition in the IT and tech world is intense. There are many UK shares that offer me exposure to the tech world. Some of these are better known and more established with similar technology solutions. There is always the chance that established firms can out muscle and outmanoeuvre smaller lesser known firms like TPXimpact.

FOR: TPXimpact has a history of acquisitions. I particularly like firms that acquire competitors and other firms to enhance their own offering and boost their own chances of success. Most recently TPXimpact acquired RedCortex Ltd which offers access to the Welsh public sector market as well as its proprietary knowledge and software. TPXimpact’s performance has been impressive recently too. This was signified by a interim report released in December. It reported that revenue increased by 77% for the six months ended 30 September. It also confirmed profit was up compared to the same period last year. A healthy cash rich balance also led to an interim dividend.

AGAINST: Gandhi has a history of building up and selling companies. Could this happen with TPXimpact? If so, would the firm’s momentum be the same in terms of performance and returns? This is a credible risk I must be aware of.

A UK share I like

Overall, I like TPXimpact Holdings. At current levels I would add shares to my portfolio. The digital revolution is in full effect and TPXimpact seems to have created a market for itself by providing important tech for the public sector. Key people in the firm have experience in guiding tech firms towards success and performance and acquisitions are on the up too. The outlook ahead is exciting.

Jabran Khan 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.

What was formerly a high-flying share boosted by the tech bull market has stumbled lately. The Scottish Mortgage Investment Trust (LSE: SMT) share price is down 4% over the past year, at the time of writing this article earlier today. It has fallen more than 20% in just the past couple of months.

Below I consider why the shares have been losing value – and what might come next.

What is an investment trust?

A helpful starting point is to understand the structure of the company. As the name suggests, Scottish Mortgage is a form of trust. This means that, rather than running its own business, it acts as a collective investment vehicle. It pools shareholders’ funds and invests them in a variety of companies.

One thing I like about such a structure as a private investor is that it can give me diversification even when buying shares in a single company. If I invest in SMT, I will be exposed to a wide range of companies. So, if any one underperforms, it will hopefully only represent one small part of the trust’s overall performance.      

But a possible downside of such a structure is that the SMT share price performance is heavily based on that of the companies in which it invests. In recent years, when holdings such as Tesla and Tencent soared, that was good news for SMT. At the same time, though, if the holdings lose value, that could be bad for the SMT share price too. That has been clear lately.

Tech and the SMT share price

The performance of tech stocks like the ones I mentioned above is important for SMT because it has a tech heavy portfolio. Indeed, the reason the shares have performed so well in recent years is largely because the trust managers have accumulated sizeable positions in a range of tech companies.

The company publishes a list of its holdings. Tech remains a large part of the trust’s focus, with the top five holdings including names such as ASML, Tesla, and Tencent. Recently, concerns about valuation have caused many tech stocks to lose ground. That has had a negative impact on the SMT share price too.

But I think there could be more to come. If tech stocks take a real tumble, or simply keep drifting downwards slowly, I expect SMT to be caught in their wake.

Where next?

In the short- to medium-term, I see SMT’s heavy tech exposure as a risk. It could lead to the SMT share price losing a lot of value if there is a selloff in the tech sector.

At the same time, tech has led SMT to large gains in recent years – and that could continue. The company is invested in a wide spread of tech names, including some companies with clear growth potential. The tech success has not been an accident, but reflects the share picking skills of SMT’s fund managers.

The long-term fund manager has been winding down his involvement lately. But that does not mean the new manager might not be equally talented. SMT could still have a glittering future. For now, though, its large tech exposure means I will not consider holding it in my portfolio until tech valuations overall look less frothy.

Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended ASML Holding and Tesla. 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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In 80 years of investing, billionaire Warren Buffett has built one of the world’s largest fortunes (nearly $115bn). How did he do it? By buying big stakes in great companies and holding onto these shareholdings for decades. As a veteran value investor, Buffett advised in 1991, “Just buy something for less than it’s worth.” He has also said, “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.” Here are three Buffett-style stocks I don’t own but would buy today, based on the Oracle of Omaha’s enlightened teachings.

Warren Buffett stock #1: Unilever

Warren Buffett is a big fan of consumer-goods giant Unilever (LSE: ULVR). Indeed, he teamed up with other investors in January 2017 in a failed bid to buy the Anglo-Dutch business when Unilever stock was trading around £32. Today, it stands at 3,932p — roughly £7 higher five years on and valuing the group at £100.8bn. However, pre-pandemic, Unilever shares had soared much higher. At its all-time high, ULVR hit a peak of 5,333p on 4 September 2019. While it’s true that Unilever’s sales growth has slowed in recent years, it was still 1.9% in 2020.

Today, this stock trades on 22.8 times earnings, for an earnings yield of 4.4%. The dividend yield of 3.8% a year is less than the FTSE 100‘s 4%, but still competitive. I’d gladly buy and own shares in this great business for the next decade, despite the headwinds facing this heavyweight firm.

Value share #2: Legal & General

To be honest, I write about Legal & General (LSE: LGEN) a lot — perhaps more often than I should. But I genuinely believe that this provider of life assurance, savings, and investments is a high-quality, Warren Buffett-style business. Today, L&G — a household name since 1836 — manages over £1trn of assets for more than 10m customers. It has an outstanding brand, a great management team, and a long record of success. Even during the depths of 2020’s coronavirus crisis, L&G kept paying out cash dividends, despite rivals cancelling their payments.

At the current share price of 305.5p, L&G stock trades on a modest rating of 8.1 times earnings and an earnings yield of 12.4%. The stock offers a market-beating dividend yield of 5.8% a year. However, if asset prices dive in 2022, this could harm L&G’s earnings and share price. Even so, I’d happily buy into this £18.2bn business today.

Buffett stock #3: London Stock Exchange Group

In February 2018, Warren Buffett said, “The best chance to deploy capital is when things are going down.” This brings me to London Stock Exchange Group (LSE: LSEG). This operator of stock markets and financial-data provider had a tough 2021. Indeed, its share price is down 21.6% over one year, making it one of the FTSE 100’s five worst-performing stocks since early 2021. Yet LSEG has something Buffett loves: a fantastic ‘competitive moat’ around its complex, interlinked businesses. As a result, this stock has leapt by 146% over five years. At the current share price of 7,216p, LSEG is valued at £39.4bn. But this stock briefly exceeded £100 on 16 February 2021, so I believe it has room to rebound. Thanks to capital expenditures and write downs, LSEG trades on an elevated price-to-earnings ratio of 80.4 and a lowly earnings yield of 1.2%. Also, the dividend yield is just 1.1% a year. Nevertheless, I view this as a growth stock poised to recapture former glories!

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever. 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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I’m hunting for the best shares to buy for my portfolio that most investors may have missed. Here are two ‘secret’ UK stocks I’d buy to try and make a stack of cash in 2022 and beyond.

Powering up my portfolio

The video games market is tipped to double in size between 2020 and the end of the decade. It’s the sort of industry growth that as an investor I find hard to ignore. It’s also a trend I’m considering exploiting by buying shares in developer Team17 Group (LSE: TM17). I already own shares in software development services provider Keywords Studios, incidentally.

Team17 is the brains behind many popular titles including Overcooked! and The Escapists. It has been taking steps to pump up its product pipeline and in 2020 it launched a record 10 brand-spanking-new games. I actually believe Team17 could become a takeover target as consolidation in the games industry takes off. Take-Two Interactive has just sealed a $12.7bn deal for FarmVille creator Zynga to bolster its games portfolio.

I am concerned by Team17’s high valuation, however. The tech stock currently trades on a forward price-to-earnings ratio of 42.7 times. Such a reading could prompt a sharp share price drop if earnings forecasts start to look fragile. For example in the event that a title receives a poor critical reception that subsequently smacks sales.

Team17’s share price has struggled for momentum more recently. Over the past year it’s actually fallen 12% in value. However, as a long-term investor I think this drop could be an attractive investment opportunity.

Heating up nicely

Manufacturers in the UK face a significant threat to earnings as supply-side problems mount. Kettle safety control manufacturer Strix Group  (LSE: KETL) has warned in recent months that supply chain disruption and soaring raw material costs remain dangers for its business.

This threatens to be a lasting problem too following Britain’s exit from the EU. Two-thirds of UK manufacturers have seen their businesses affected by Brexit red tape, according to a new survey. Some 56% of respondents expected these problems to worsen in 2022 too as new customs checks come into force and new product labelling rules begin.

The question is whether these obstacles are enough to discourage me to invest in a particular UK share. In the case of Strix Group I believe the profits outlook is bright despite these supply-side problems.  Sales at the business soared 58% in the first six months of 2021, latest data shows. This was thanks to solid organic growth as well as the acquisition of water filtration specialist LAICA in 2020.

The business aims to double turnover over a five-year period and recently opened a new manufacturing facility in China to help it achieve this goals. The company has risen almost 30% in value over the past 12 months but at 290p is down considerably from August’s record highs above 380p. I reckon this provides me with an excellent dip buying opportunity.

Royston Wild owns Keywords Studios. The Motley Fool UK has recommended Keywords Studios and Take-Two Interactive. 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 long-running stealth correction of over-priced and mainly tech-related stocks in the US has started to affect the main US stock indexes. And judging by the noises I’m hearing, US stock traders have been losing money. Or, some have been avoiding stocks because they think a bear market is coming for the whole US stock market.

Of course, such concerns affect US-based long-term investors far less. And to many, the recent falls will be seen as an opportunity to shop for stocks when they’re assigning cheaper valuations to quality businesses.

The UK market is waking up

But I reckon the UK stock market looks like it’s decoupled from the US market — at least for the time being. And I’ve arrived at that conclusion because of the movements in my own portfolio.

For example, my US stock trackers have moved from being among the biggest shorter-term gainers in my account to being the biggest losers. And there’s no surprise there. But what has caught my attention is my UK-focused trackers have been shooting higher. And funds following the FTSE 100 and FTSE 250 indexes, for example, have become my best-performing passive funds in the short term .

But many market commentators have been talking for some time about a rotation from growth-focused momentum stocks to value. That’s especially the case for some of those talking heads based in the US. Most investors consider valuations as one criterion when shopping for stocks to buy and hold for the long term. So it’s natural for some investors to sell out and look for better value elsewhere when popular US stocks showed stretched valuations.

Meanwhile, it’s well-known that the UK market doesn’t have as many high-tech, fast-growing businesses as the US. And by US standards, many of the businesses listed in London have had modest-looking valuations for years.

But although we don’t have as many headline-grabbing mega-tech companies, we do have a lot of quality enterprises. And to me, their shares are worth owning for the long term. However, I’m not alone in that assessment because lots of UK stocks have burst into life. And that’s even as US trend-following investors cry into their Budweisers!

Valuation matters — it really does!

For example, news publisher and distributor Reach moved higher today. And media and entertainment company ITV has been edging up for a few days. Those firms both operate in the media industry. But they also both sport a low-looking valuation. And they aren’t the only UK stocks looking perky — there are many.

My guess is part of the UK’s market strength arises because of an improving outlook for the pandemic. Although I could easily be wrong about that. And I could also be wrong thinking the lower-looking valuations for many UK stocks improve the chances of me making successful long-term investments. Indeed, all kinds of operational challenges could befall the underlying businesses in the years ahead, despite cheaper valuations.

Nevertheless, I’m enthusiastic about the UK stock market right now. And I see the current situation as a potentially once-in-a-lifetime opportunity for me to research and choose between decent UK value shares including Reach, ITV and others. And I’d aim to hold my selections for the long haul. 

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