Raspberry Pi Holdings (LSE: RPI) within the FTSE 250 index is inflicting a bit of pleasure.

Possibly the home-grown expertise inventory’s about to supply British traders the possibility to take part in eye-popping multi-year funding returns. You understand, identical to our American cousins take pleasure in from their many mega-sized expertise firms.

The indicators are encouraging with this one. Though the enterprise has solely been listed since June, it’s removed from being a profitless start-up.

Quick-growing financials

The enterprise has been constructing its mini-computers since 2012. Now it’s well-funded with a robust steadiness sheet. Moreover, it’s promoting merchandise like mad, is worthwhile, and has been throwing out the sort of earnings progress figures even a US tech firm can be pleased with.

There are some influential believers on the market too. Know-how big ARM Holdings holds a slug of the shares, and ARM processors are inbuilt to Raspberry Pi merchandise. In the meantime, funding financial institution Peel Hunt is appearing as joint dealer for the British firm and has been super-enthusiastic concerning the enterprise.

Raspberry Pi is among the “best-known” tech manufacturers born within the UK, the financial institution mentioned. The corporate has already bought greater than 60m of its “innovative” single-board computer systems (SBCs).

The enterprise creates semiconductor mental property (IP), optimised software program, and engineers its provide chain to spice up the unit economics of its SBCs. Okay, however the business bit is that SBCs assist folks to make use of cost-efficient computer systems in industrial and different settings — often called Edge computing.  

The concept is that firms, organisations and people can higher reap the benefits of the unreal intelligence and machine studying revolution. SBCs may assist to make the a lot talked about web of issues (IoT) occur. To me, that certain sounds prefer it’s giving folks an edge within the sport!

Raspberry Pi’s been promoting this stuff like scorching muffins. Round 72% of gross sales have gone to industrial and embedded functions all over the world through a community of authorised resellers and licensees.

A future tech big within the making?

Peel Hunt argues the corporate is serving a big and rising market and suggestions it as having the potential to turn out to be a tech powerhouse identical to a few of its huge US cousins. If that occurs, it’s doable the inventory could remodel my portfolio over the following decade.

However there are dangers, as at all times. One is the present valuation. With the share price within the ballpark of 500p, the forward-looking price-to-earnings (P/E) for 2025 is round 45. That’s dear.

On prime of that, earnings have been unstable and forecast to return in down a bit for 2024 with a rebound subsequent 12 months. In order that’s a bit unsettling.

One other danger is that well-minted competitors could swoop in and eat into Raspberry Pi’s market share.

However, to me, this seems to be like an thrilling long-term progress proposition. So I’ve determined to embrace the dangers of holding the inventory with a 10-year timeframe in thoughts.