Rising bond yields are putting pressure on richly priced assets, which makes quietly priced UK technology companies look more interesting. As investors reassess what they are willing to pay for future growth, some tech stocks have drifted to levels that do not fully reflect their potential. This article highlights three British tech opportunities from our undervalued screen that could be of interest to patient investors who are looking for quality at a discount.
The three stocks below are just a small sample, and the full undervalued tech screen surfaced 21 more UK listed companies with similarly interesting stories that are not covered here.
If you want to identify and analyze potential high conviction opportunities across software, hardware and semiconductor names, head straight to the Undervalued Tech screener .
Bytes Technology Group (LSE:BYIT)
Overview:Bytes Technology Group is a UK based IT solutions provider that resells software and cloud licenses, security tools, devices, and related managed services.
Operations:Bytes Technology Group generates about £220.6 million from IT solutions, largely in the United Kingdom at approximately £211.9 million of revenue.
Market Cap:£1.03b
Bytes Technology Group matters for this Undervalued Tech screen because its core software and cloud licensing work directly connects customers to the tools driving modern IT spending.
"Although services gross profit rose 38% with around two thirds of that now coming from recurring managed work, the much slower 2.5% gross profit growth compared with 11.5% gross invoiced income and a 5.6% fall in operating profit suggest that higher margin services may not be scaling fast enough to counter weaker reseller economics."
What happens to Bytes Technology Group's appeal in this theme depends on how one unseen pressure on its profitability arc ultimately resolves.
That pressure point is exactly what the full narrative for Bytes Technology Group unpacks, showing where profitability could reaccelerate and how the reseller model might quietly reset in your favour.
Alfa Financial Software Holdings (LSE:ALFA)
Overview:Alfa Financial Software Holdings provides cloud hosted asset finance software and related services that help banks and lenders manage vehicle and equipment leasing.
Operations:Alfa Financial Software Holdings generates about £129.3 million from sale of software and related services, mainly across the Americas and other international markets.
Market Cap:£468 million
Alfa Financial Software matters for this Undervalued Tech screen because its Alfa Systems 6 platform is a pure software play on asset finance, linking directly to the software and services theme through recurring cloud subscriptions and implementation work.
"The transition to a SaaS model with a focus on Subscription revenue is driving mid‑teens growth, increasing long‑term recurring revenues and improving revenue predictability."
What happens to Alfa Financial Software's appeal in this theme turns on how one unresolved squeeze on profit margins eventually shakes out.
That margin squeeze is exactly what the full narrative for Alfa Financial Software Holdings unpacks, showing where subscription economics could be accelerating and where one off factors might be masking the real earnings power.
GB Group (LSE:GBG)
Overview:GB Group provides identity and location data software that helps businesses verify customers, combat fraud, and meet KYC and compliance requirements.
Operations:GB Group generates about £175 million from Identity solutions and £89 million from Location services, with revenue spread across the UK, US, Australia and other regions.
Market Cap:£331 million
GB Group matters for this Undervalued Tech screen because its identity verification and fraud prevention software sits at the intersection of digital onboarding and regulatory pressure, with location tools adding an extra layer of usefulness for customers already embedded in its ecosystem.
"The company's move from AIM to the Main Market is expected to attract new pools of institutional capital, increase index inclusion, and unlock capital allocation flexibility (including further buybacks and M&A), setting the stage for accelerated earnings-per-share growth and improved valuation multiples."
The strength of GB Group's appeal in this theme depends on how one unseen pressure on its margin recovery and identity growth path ultimately resolves.
If you want to see how that pressure could turn into accelerating upside for GB Group, read the full narrative for GB Group to understand the full margin and identity story.
Seeking Fresh Alternatives Beyond These Picks
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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