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Why the Technology One Limited share price just hit a 52-week high

The Technology One Limited (ASX: TNE) share price hit a 52-week high of $6.69 today despite the IT and software-as-a-service business not releasing any material news to the market since before Christmas 2018. In FY 2018 it posted a net profit of $66.5 million on revenue of $299 million, with total dividends per share of 11.02 cents.

The company could be heading higher on the back of strength in the tech-heavy US Nasdaq index overnight that has lifted a lot of tech favourites in Australia today, including Wisetech Global Ltd (ASX: WTC), up 3.2%, and Appen Ltd (ASX: APX) up 3.9%.

In other words tech shares’ valuations are heavily sentiment driven in that investors tend to follow the crowd in buying and selling on general news flow, irrespective of valuations.

Technology One is also one of the ASX’s best and most established tech businesses in that it has paid dividends consistently for 23 years (something others could only dream of) with a return on equity of 28% and no debt to speak of.

In response to its consistent growth the stock has nearly tripled over the past five years alone and today’s record high may not be the last.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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