An auction that I’m bidding on

As a relative newcomer to the FTSE 350, Auction Technology Group (LSE: ATG) hasn’t had the easiest inaugural term. It made its stock market debut in February 2021. Since then, it has proven to be a company that can either outperform or underperform significantly.

Auction Technology Group specialises in providing online auction facilities to a global audience in a variety of niches — for example, antiques, art and fashion, as well as industrial and commercial equipment. As you can imagine, Covid-19 really boosted turnover into overdrive as in-person events were significantly reduced.

Revenue grew by over 100% compared to approximately 10% the year prior, and results have been strong since. The main caveat was that despite rising sales, costs grew proportionately and they failed to turn a profit. This remains my primary concern, but forecasts predict positive net profit for 2022 and if management can deliver, I might just make a late bid to buy the shares.

Software and sustainability

Another technology company that caught my eye was Aveva Group (LSE: AVV). With sustainability a top priority for every firm looking to both please shareholders and boost long-term prospects, Aveva’s services certainly look optimal for improving efficiency. Oil giants such as BP will be required to improve their operating efficiency and optimise their flexibility when adapting to a world fuelled by alternative energy. Aveva helps them and its other clients do just that.

By providing innovative engineering software, Aveva can reduce system decision-making time across supply chains and improve functional performance. Teamed with revenue growth of 47.9% and a forecast price-to-earnings ratio of only 22.8, relative to its three-year average of 33, I’m giving this company a good look at over the next few months.

Cyber security

The Darktrace (LSE: DARK) share price has plummeted by 55% since its October 2021 highs, and the company now trades at a market capitalisation of only £3bn. As a slightly more risk-averse investor, I do find the valuation slightly intriguing. Despite the lack of earnings and perhaps expensive price of its shares, Darktrace possesses something that is relatively rare for UK-based investors: a chance to invest in a reasonably large firm at the absolute cutting edge of technological advancement.

Darktrace pioneered the integration of AI and cybersecurity, sustaining a competitive advantage over larger peers for quite some time. With renewed cyber security interest as a result of the invasion of Ukraine, I’m going to wait on the sidelines but look slightly closer for now.

Before investing in any of these companies I’m going to see if central banks can restrain inflationary pressures. If they do, I’m interested.

Curated auction leader

The Auction Technology Group is the world’s leading curated auction marketplace provider. Over 2,000 auction houses use its technology and £6bn worth of items are sold each year. It launched on the London Stock Exchange via an initial public offering (IPO) in February and its share price has soared.

ATG supports existing auction houses by offering software, design and e-commerce solutions. It also runs the well-known auction sites i-bidder.com and BidSpotter. Furthermore, it has an antiques trade magazine and several additional marketplaces. I think the digital art craze for non-fungible tokens (NFTs) is renewing interest in auctions. Plus the stay-at-home economy has boosted revenues. In fact, group revenues rose 48% to £34.5m in the half year to the end of March. 

The ATG share price is up 45% since IPO. The company has a £1.1bn market cap and, as mentioned, is now in the running to join the FTSE 250. There’s a risk the reopening could reduce interest, but with a clear shift to e-commerce I feel bullish on the sector. I’d happily buy shares in ATG today.

Reviews giant

Another FTSE 250 contender is online review site, Trustpilot Group, was founded in Denmark in 2007 and launched via an IPO in March.

The Trustpilot share price has risen 20% since IPO and it now has a £1.3bn market cap.

It invests in its technology and big-data ecosystem to enhance ease of use for both users and clients. The site mission is to be open and collaborative, and it’s popular with consumers for providing unbiased website reviews It removed 2.2m fake reviews last year). The company makes money from paid products and services. The hook for businesses is they get an element of marketing and enhanced credibility for the business.

Keeping on top of fake reviews and ensuring a high level of trust is key for its ongoing success. Nevertheless, I think this looks like a great business and I’d consider buying Trustpilot shares, FTSE 250 member or not.

Ventilation specialist

Ventilation specialist Volution Group operates internationally. It sells its extractor fans and installations to consumers and businesses. The UK accounts for half its business, with Europe and Australia making up the rest.

Following the M&A roadmap to scale is a clear priority for Volution. For now, it sees many opportunities in the UK and Continental Europe, but doesn’t rule out considering North American prospects in the future.

So far, it’s financed its deals from its own cash generation. But it has noted it may move into issuing equity for future acquisitions. This could lead to share price dilution, so I imagine market reaction would depend on the quality and size of acquisition.

Commodity pricing pressures are another issue that could cause share price volatility for the group. Nevertheless, I like the outlook for this business. After the pandemic, demand for ventilation appears to be rising. It’s the same new territories as climate change raises temperatures. I’d consider adding Volution Group shares to my Stocks and Shares ISA.