The Dicker Data Ltd (ASX: DDR) share price is eyeing a comeback in 2021 after slumping slumping as much as 20%
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The past few months have proved challenging for the Dicker Data Ltd (ASX: DDR) share price.
Its shares were up some 15% year-to-date after hitting a record high of $12.60 on 9 February. Rising bond yields in mid-February saw a broad selloff in tech shares and, with it, sent the Dicker Data share price some 20% lower in the coming weeks.
The Dicker Data share price is attempting to return to positive territory, up almost 7% this week.
Why the Dicker Data share price could be on watch in 2021
Dicker Data represents a classic example of a falling or flattening share price while business fundamentals continue to improve.
Dicker Data is an Australian hardware, software and cloud distributor with a valued partner base of over 6,000 resellers. The company distributes a wide portfolio of products from some of the world’s leading technology vendors including Cisco, Citrix, Dell Technologies, Hewlett Packard Enterprise, HP, Lenovo and Microsoft.
In FY20, the company’s revenues increased 13.6% to $2 billion, while net profit after tax increased 5.3% to $57.2 million. Dicker Data has a strong history of steady or growing earnings, with a respective five year compound annual growth rate of 14.0% and 19.2% for revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA).
What’s in store for the Dicker Data share price in 2021?
Dicker Data has highlighted the working from home movement as a key focus in 2021. It observes that the shift to working from home has seen the digital transformation of businesses rapidly accelerate. It believes there is now a large opportunity as IT departments no longer have to secure just office environments but home user environments as well.
The rollout of 5G networking and technologies is what Dicker has called ‘the next wave of data creation’ and presents an opportunity to capitalise on new devices and infrastructure. The company believes 5G will usher the next era of cloud solutions that will enable real-time decision making, further driving the cloud’s consumption and the company’s recurring revenues.
To address increasing demand, Dicker Data has invested in a new warehouse facility in Kurnell, NSW. This will increase its existing warehouse space by over 80% to 22,965 sqm, providing space for increased inventory holding and further technology portfolio diversification.
The Dicker data share price is trading marginally higher today at $10.77.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.