For anyone who hasn’t already, I think it’s a great time to consider opening a Stocks and Shares ISA. But the big issue is what to put in it.
It sometimes seems like the only games in town are space and artificial intelligence (AI). But it’s times like this that Warren Buffett’s key advice comes into its own.
Fear and greed
The big stock market story right now is Space Exploration Technologies. After going public at a record valuation, its bought an AI coding start-up for $60bn.
Elsewhere, recent data suggests investors see inflation as the biggest threat to share prices. And they think everyone piling into semiconductor stocks at the moment is increasing the risk.
Nobody’s fearful of rocket companies with trillion dollar valuations or chip companies at cyclical highs. They are, however, more wary of other stocks.
I think there are some quality companies whos shares have quietly fallen out of favour. And that’s where I’m looking for my Stocks and Shares ISA.
A quality stock down 43%
Roper Technologies (NASDAQ:ROP) fits that description. The shares closed at $329.97 on 17 June, around 43% lower than the all-time high of $588.42 set in March 2025.
That’s quite a fall. For a business that just posted 11% revenue growth, 11% free cash flow growth, and raised full-year guidance, that’s quite a fall from grace.
Roper’s speciality is niche, market-leading vertical software businesses. These do things like run payroll for primary schools or manage workflows for legal firms.
There’s a lot to like about these operations. Competition is limited, revenue is recurring, and it creates a lot of cash for the firm to support growth through acquisitions.
What’s the problem?
The big question is whether AI creates a threat to Roper’s businesses. The worry is that lower barriers to entry for competitors might limit future growth.
CEO Neil Hunn doesn’t think so. His view is that specialised vertical software isn’t as easy to disrupt as spreadsheets or other products designed to work across industries.
I think there’s a lot of plausibility to this. In my view, that’s what makes the firm different to the likes of Adobe or even Microsoft.
Investors, however, are absolutely right to take the risk seriously. The question is whether a 43% decline in the stock constitutes an overreaction – and I think it might.
Put up or shut up
Talk is cheap. But cash isn’t and it’s worth noting that Neil Hunn bought around 10,000 shares – worth about $4.5m – in November 2025 with his own money.
That’s a strong sign the CEO believes what he’s saying. It doesn’t guarantee that he’s right, but it’s a good indication it’s not just talk.
The company also repurchased 4.3m shares for $1.5bn, with a further $3bn to follow. That’s a lot for a $33bn operation.
It’s unusual for a firm that normally focuses on using its cash to buy other businesses. But I think taking advantage of a stock trading at decade-low multiples has to be commendable.
What I’m doing
The stock market is selling off software shares indiscriminately at the moment. But I think that’s a mistake in some cases.
Roper is one that I think has some unique points of differentiation. So I’m looking to keep adding to my existing investment in my Stocks and Shares ISA.
Should you invest £5,000 in Roper Technologies right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Roper Technologies made the list?
Stephen Wright owns shares in Microsoft and Roper Technologies.
