As the digital revolution continues, this FTSE 250 stock looks like a bargain!

FTSE 250 incumbent Softcat (LSE: SCT) would be a good stock for me to buy to capitalize on the way the world is adapting to technology in everyday life.

A personal example of this is that I have to fill in a long winded form on my local council website to request a recycling bin. Some years ago, a simple phone call would have done the trick.

That's why I would be willing to buy Softcat shares if I next have some free money.

Technology supplier

Softcat is a UK based information technology infrastructure and service provider. Its core offerings include software licensing, workplace technology, cybersecurity, networking, and more. The business is mainly focused on public sector organizations, as well as small to medium-sized enterprises.

Interestingly, the shares remained stable over a 12-month period. They are currently trading at 1,480p, compared to 1,482p this time last year.

My investment case

Starting with the bear case, I see the main reason that the share price has not advanced much over the past year is because of Softcat's core customer base. Public sector organizations are in a state of economic instability. This chaos can lead to budget cuts and revisions. In turn, non-essential technology spending can be reduced. Since Softcat is heavily dependent on this sector, revenue and returns may suffer going forward.

The other two issues I have are sizing and pooling. Shares of Softcat currently trade at a price-to-earnings ratio of 27. While high valuations are a trend for tech stocks, is growth already priced in here? As for installations, all of Softcat's revenue is derived from the UK, which is different from its competitors. Kainoswith a wide coverage that can give it a competitive edge.

On the other side of the coin, it's hard to ignore Softcat's track record from a performance and price point perspective. Shares are up nearly 500% over the past decade. This was due to exceptional performance, growth, and shareholder value.

Although the past is no guarantee of the future, I still think there is plenty of room for growth. For example, the public sector has arguably been neglected in the digital perspective in recent years. While I appreciate the risk of budget cuts, many organizations Softcat has excellent relationships with need to spend on IT solutions to keep up with today's world. This can translate into improved profits and business returns.

In addition, the emergence of artificial intelligence (AI) could be another way for Softcat to raise funds.

Finally, the 2.5% dividend yield reduces the investment case. However, I understand that benefits are not guaranteed.

My decision

Despite the obvious challenges, I think the pros outweigh the cons. Softcat is a type of stock that has shown how to navigate tricky situations, including a competitive sector, to grow and become an established force.

With so much growth potential, I think Softcat's journey is far from over. There may be more profitable times ahead, and I would like to buy some shares to enjoy the ride.