Image source: Getty Images
When investors think of growth stocks, they typically think of the S&P 500. More specifically, the likes of Amazon, Meta, and Palantir are the first names that come to mind.
That’s perfectly reasonable. But for those who know where to look, I think the UK has some tech stocks with extremely interesting growth prospects.
Celebrus Technologies
Celebrus Technologies (LSE:CLBS) is a good example. It’s a software company with a product that allows businesses to monitor what customers are doing on their websites and apps in real time.
This is extremely valuable. It can tell online retailers when people abandon their orders, or let insurance firms know which parts of their policies customers spend the most time reading.
It’s also valuable in regulated industries, like banking. And unlike other products, it provides detailed data in real time – rather than hours later – allowing instant fraud detection and response.
Importantly, the technology that sets Celebrus apart is patented until 2034. This gives it time to sign up customers and the high cost of switching should bring long-term recurring revenues.
Growth
Celebrus has a lot of the features I look for in a growing business. Over the last 10 years, sales have gone from around £10m to just over £32m – an average growth rate of 12% a year.
Celebrus revenues 2020-24
Created at TradingView
Investors might note that the growth hasn’t been smooth. This however, is the result of the company switching from selling perpetual licenses to a subscription-based model.
Instead of paying big up-front costs, customers pay a smaller fee on a recurring basis. This is bad for sales in the short term but, over time, it results in more predictable revenue streams.
Importantly, the firm operates in an expanding market. The Customer Data Platform market’s set to grow at around 28% a year until 2033, giving Celebrus a lot of scope for future growth.
Risks
Anyone who thinks the UK doesn’t have any good tech stocks should take a look at Celebrus. But growth stocks are always risky and this one’s no exception.
The most significant risk is competition. The market’s competitive and the UK company’s up against some big businesses, including Salesforce, Adobe, and even Microsoft.
Celebrus has a product that offers more granular real-time data, but it’s overmatched when it comes to resources and spending power. That’s something investors need to keep in mind.
This might be a disadvantage when it comes to providing generic solutions. But for businesses looking for more detailed data they can use in real time, I think the company has a real edge.
Under-the-radar
I’ve got this far without mentioning artificial intelligence (AI) and it seems a shame to spoil it now. But yes — Celebrus is using AI to turn its data into valuable solutions for customers.
With a market-cap of £87m, Celebrus goes unnoticed by a lot of investors and the share price has gone from £2.12 to £2.22 over the last five years. It’s far too small for the FTSE 100 or the FTSE 250 and not many analysts pay attention to it.
I think they should. With no debt on its balance sheet and 30% of its market-cap in cash, I think the company’s growth prospects mean the stock’s well worth considering.
