The Motley Fool

What does UXC Limited’s 10% surge mean for the tech services sector?

The earnings drought in the information technology (IT) sector might have finally been broken with UXC Limited (ASX: UXC) the latest to announce a profit upgrade ahead of the February reporting season.

The business IT solutions firm is forecasting a circa 85% surge in pre-tax profit to about $8.5 million and a 10.4% jump in revenue to around $322 million for the six months to end December 2014.

The upgrade stands in contrast to management’s previous guidance at UXC’s annual general meeting when it predicted a “more than 50%” uplift in profit before tax and an 8% increase in sales.

UXC jumped over 10% in morning trade to a one-month high of 78.5 cents but there’s plenty of room left for it to play catch up with the stock still down 26% over the past 12 months.

UXC

The last two months of calendar 2014 had been particularly strong for the group, which will post its official first half results on February 26.

The update bodes well for the outlook for the sector, which has been hit by IT budget cutbacks at both the corporate and government levels due to the uncertain economic conditions.

UXC isn’t the only one bearing good tidings. I wrote about Prophecy International Holdings Limited (ASX: PRO) surging 13% in early January on management’s guidance of record earnings, while Data#3 Limited (ASX: DTL) told shareholders two months ago to expect solid growth in first half profits.

Prophecy has continued to hold on to those gains while Data#3 is up close to 4% since its market update on November 21, or 3% ahead of the S&P/ASX 200 Information Technology Index.

I suspect we will see further upgrades in the sector as companies and governments find themselves unable to hold off spending on IT any longer.

DID YOU KNOW... The Motley Fool’s top analysts have just completed a brand-new free report on their top pick for 2015. Be among the first to get the name and code right now. (Hint: It’s a sexy ASX tech company!) Simply click here for your FREE copy... BEFORE the investing crowd gets wind of this!

Motley Fool contributor Brendon Lau does not own stocks mentioned in this article.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now