My funding technique to date has admittedly been comparatively mild on progress shares. Regardless of numerous hours of research on varied firms, I’ve all the time leant extra in direction of worth shares.

Nonetheless, there’s one IT companies firm hitting its progress targets that has actually caught my eye.

Softcat (LSE: SCT) is a market chief valued at a contact over £3bn. The UK-based firm is a number one supplier of IT infrastructure to company and public sectors, providing options together with cyber safety, digital workspace companies and cloud computing.

In accordance with Statista, the worldwide infrastructure as a service market is ready to develop from US$154.7bn in 2023 to $359.8b by 2028. This massive and rising addressable market, whereas going through challenges of market saturation and safety points, has me excited.

I believe the chance on this progress inventory is simply too good to go me by. The corporate’s share worth is down round 30% from its all-time excessive however has climbed 20% increased in 2024 on the time of writing.

A powerful progress profile

With a powerful trade profile, the corporate’s monetary statements and investor reviews are the place I regarded subsequent.

Softcat’s half-year outcomes final month solely confirmed my perception. Regardless of reporting an 8.8% dip in half-year income, largely from lagging {hardware} gross sales, there was loads to love in regards to the firm.

Softcat reported rising gross and working earnings alongside a wholesome stability sheet. Actually, the corporate is debt-free, with £112.5m money readily available. This could give the corporate extra monetary and operational flexibility, unconstrained by the excessive money burn of servicing massive money owed.

All in all, the interim outcomes confirmed what I believed – this appears to be like like a money generative and rising enterprise. Softcat elevated its headcount by 14.6% within the first half of the 12 months because it appears to be like to construct capabilities and “scale to allow long-term market share good points in a rising sector”. That is music to my ears as a long-term investor.

There’s additionally the factitious intelligence (AI) angle that takes my fancy. Softcat has famous robust demand for generative AI and expects this to offer a tailwind for its personal enterprise going ahead.

Whereas shares in Nvidia and others have exploded amidst an AI scramble, I believe Softcat may quietly profit as an adjoining service supplier within the area over the medium time period.

In fact, I’m not naïve that my imminent Softcat buy has its dangers. {Hardware} gross sales stay beneath stress and IT companies is a extremely aggressive, and more and more crowded, market. There’s the ever-present operational and public relations dangers arising from cyber safety breaches as nicely.

The corporate has a price-to-earnings (P/E) ratio of round 28, which is increased than Computacenter, buying and selling round 16. Which means a few of this potential progress is already being priced into its present valuation.

The decision

Softcat ticks all my packing containers as a progress inventory. A quick-growing trade, robust market place and wholesome stability sheet has me itching to purchase.

Sure, the corporate is a bit of on the costly facet. Sure, there are different rivals doing nicely within the area. Sure, there are dangers that it doesn’t proceed to realize its progress targets.

Nonetheless, I believe at 1,615p per share, with the numerous AI tailwinds looming, Softcat is one which can be in my portfolio very quickly.