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Selecting growth stocks to help bolster my holdings today and build wealth tomorrow is simply smart investing, in my opinion.
One pick I would love to buy when I have some cash to invest is Kainos Group (London: KNOS).
Here's why!
Helping others work smarter
Kainos Group is a British-based technology company dedicated to providing information technology services. Specifically, it offers consulting and software solutions to help other businesses work smarter, not harder.
The stock hasn't had the best 12 months, down 31%. However, I'm not too worried about it – in fact, it might provide me with a better entry point to buy some shares.
Last year at this time, Kainos shares were trading at 1,235 pence, compared with current levels of 840 pence.
The good, the bad and not much of the ugly
I believe Kainos stock has been a victim of economic volatility. Clients have delayed projects as higher interest rates and inflation affect budgets. This can have a material impact on earnings and investor sentiment.
For example, the company's most recent trading update reflected this, as it showed that earnings will be lower than expected for the full year. Any company that confirms it will miss forecasts is usually met with a negative reaction from investors. I will be keeping an eye on the impact of higher interest rates on Kainos' performance.
Another bearish aspect that I will be watching closely is the competitive nature of the technology sector in which Kainos operates. It is still a smaller company compared to some competitors such as Soft catfor example. These larger companies often possess the experience and presence needed to win contracts for new business due to their current position in the market.
Moving on to the other side of the coin, I must admit that I am particularly excited about Kainos. Working hours This software has gained popularity in recent times and Kainos' collaboration and experience could be a source of income for the company.
Next, Kainos has also decided to adopt and incorporate artificial intelligence (ai) solutions into its offering. You may have heard, read or seen the hype around ai capabilities. Again, Kainos’ adoption of this technology could provide another boost to profits, returns and confidence.
Another positive aspect I noticed is that Shore Capital, one of the best brokers on the market, recently gave Kainos a “buy” rating. Although broker ratings don’t guarantee anything, I tend to pay attention to reliable and knowledgeable financial brokers who understand the markets and do a lot of research.
Finally, the stock offers a 3.2% dividend yield, which supports my investment argument. However, I understand that dividends are never guaranteed.
Final thoughts
Although the economic turmoil has affected Kainos stock, I am not overly concerned as a long-term investor. I see plenty of future growth for the company and buying shares now could prove fruitful as part of my investment strategy.
There may be some bumps along the road, which is normal when it comes to investing. However, it is hard for me to ignore Kainos’ capabilities, future prospects and current fundamentals.
