3 British technology stocks to buy for the digital revolution

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The world today is in the middle of a technological revolution. Made possible by the emergence of powerful new technologies such as cloud computing, artificial intelligence, and 5G, this revolution is completely changing the way we live, work, and communicate.

The good news for UK investors like myself is that there are plenty of top tech stocks on the London Stock Exchange that are benefiting from this digital revolution. With that in mind, here are three tech shares I’d snap up for my portfolio today.

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Calnex Solutions

Let’s start with Calnex Solutions (LSE: CLX), which specialises in telecommunications network testing solutions.

Calnex has generated strong revenue growth in recent years and I expect its top line to keep climbing in the years ahead. That’s because the rollout of 5G network technology, along with the introduction of new technologies such as self-driving cars, will mean that networks need to be tested rigorously. According to Grand View Research, the market for 5G testing is set to grow by around 9% per year between 2020 and 2027.

Last month, Calnex posted an excellent trading update. Here, it advised that its order book was sitting at “record levels” and that the board was confident that the group can deliver “significant, sustainable growth” over the coming years. This is encouraging, to my mind.

One issue with CLX is that the stock has had a good run recently. So, it could experience a pullback in the short term. Over the long term, however, I think there’s a good chance it will deliver attractive returns.

Kainos

The next stock I’d buy is Kainos (LSE: KNOS), which helps organisations with digital transformation.

Kainos, like many other tech stocks, has underperformed in 2022 as investors have focused more on value. At the start of 2022, its share price was near 1,900p. Today, however, it’s close to 1,200p.

I see this decline as a great buying opportunity. Because nothing has really changed within the company. Indeed, last month, Kainos advised that trading for the year ended 31 March 2022 had been “very strong”. It added that it’s well-positioned for further growth due to its “significant contracted backlog”.

I’ll point out that even after the big share price pullback, KNOS isn’t cheap. Currently, the P/E ratio is about 30. This doesn’t leave much room for error. If growth was to stall, the stock could fall further. I’m comfortable with that valuation, however, as I think the growth potential here is significant.

Volex

Finally, I’d also buy Volex (LSE: VLX). It manufactures high-performance power cords and cables for a range of industries, including the electric vehicle (EV) market.

Volex has a lot of momentum right now. In a recent trading update, the group advised that revenue for the year ended 4 April is expected to be up 37% year on year while revenue in its EV segment had nearly doubled. It added that it was handling inflation and supply chain problems effectively.

Yet this momentum is not reflected in the share price or the valuation. Since September, the share price has fallen from 500p to 260p. Meanwhile, the P/E ratio now is just 11.5.

At that valuation, I see an attractive opportunity here. The stock could continue to be volatile in the short term, but I think in the long run, it could go much higher.

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