However, in addition to these players, there are several smaller companies that are benefiting significantly from the growing adoption of cloud platforms by businesses. These are the tech penny stocks that had the highest total return over the last 12 months. Stocks with returns in excess of 3,500% have been excluded as outliers. IBD groups software companies as enterprise stocks as well as in vertical markets such as financial and medical.
Analyst Piper Sandler downgraded the stock to Neutral from Overweight and lowered the price target to $242 from $278. Discover generally trades at low stock valuations, which makes its share buybacks very lucrative. It’s one of the companies where I think share buybacks actually make a lot of sense for shareholders.
It offers simple subscription pricing and can be set up in minutes. And the stock has been a winner, with nearly 170% gains so far in 2020. Revenues are expected to grow by one-third in 2020, to $390 million. Canaccord Genuity analyst Michael Walkley initiated TWLO at Buy at the end of May, saying that Twilio “has proven resilient” amid the pandemic. It has established itself as the leading CPaaS brand and is successfully aiming at large enterprises that were not previously using cloud computing.
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A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month.
With Android and other portals for reaching users, they further diversify their reach and ensure continued interaction with their platforms. Their ad network on various websites benefits from the network effect; as more publishers and advertisers use the network, it increasingly becomes the standard to use online. Going forward, the company plans to maintain its debt/EBITDA ratio in the range of 4.5x-5.0x and keep its strong credit rating. Now that deleveraging is done, they have more flexibility for growth and returning capital to shareholders.
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VMware supplies virtualization software, solutions and services. Rangan says he is confident the company can grow annual revenue from around $12 billion to $20 billion in the long term. However, VMware’s cloud business has been negatively impacted by the health crisis more than Goldman’s other top stock picks, and the stock may not have as much upside in the near term. In addition, Rangan says VMware’s relationship with minority investor Dell Technologies and the circumstances surrounding a potential spinoff of Dell’s stake create uncertainty for investors. Goldman has a “neutral” rating and $150 price target for VMW stock.
However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Increased corporate spending on cloud computing, digital transformation, big data analytics and artificial intelligence all drive revenue growth for software stocks. Once companies have experienced the convenience that derives from employees being able to access their applications, data, and platforms from anywhere, there’s simply no going back.
While Dropbox did see an uplift in demand, what caught me by surprise was the more significant surge in usage of Microsoft Teams, arguably Dropbox’s primary competitor in the enterprise space. This would create a neutral hub/platform for knowledge workers to manage their content and workflows. Dropbox had a strong track record and what I believed to be an advantageous position with its 600 million registered userbase. SNOW) which went public in 2020 and raised a valuation of $3.46 billion in its Initial Public Offering . In the fourth quarter of 2020, the company’s public-cloud-based services revenue was up 165% to $106 million year-over-year.
Every company in every industry can benefit from cloud computing because they use technology to conduct business operations. It has garnered 6% of the worldwide cloud market share, landing it just behind Google as the world’s 4th largest cloud computing company. Some call it the best business globally — as of Q4 2020, AWS’ market share in the worldwide cloud infrastructure market amounted to 32 percent. Management said the relatively weak results are the result of more normal business activity and less remote work, which is hurting the freelance market. This is a short-term hit to Fiverr, and it makes sense the stock is down big given the fact the company has a market cap of $6.3 billion and expects revenue of just $280 million to $288 million this year.
Strength in both Proofpoint products and the industry as a whole suggest Proofpoint should easily be able to do so. In 2018, the company had 700 users worldwide, including Nike, Concentrix, Coca-Cola, and TD Bank.
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“Over the next year, we suspect Fastly will be able to gain an even larger share of the vast content delivery network market, which will be worth an estimated $22 billion by 2024,” Milan adds. What’s nice is that Fastly’s software allows even smaller companies to create a global footprint. This is among several factors that have made the cloud stock a darling, writes D.A.
Alphabet’s overall revenue for the first two quarters of fiscal 2021 grew 47% compared with the first six months of 2020. During the same period, Google Cloud increased its revenue by 50%. This far exceeds the forecasted 19% compound annual growth rate for the industry predicted by Grand View Research. Let’s find out a bit more about these three top cloud computing stocks and see if they are good buys right now. Companies like Salesforce.com that offer subscription-based software-as-a-services arrived before the term cloud computing was coined. Many SaaS companies are now working with AWS and other cloud vendors to reach new markets. Everything about this company looks stable and ready to play in an ever-shifting cloud computing market.
Valuations are sky-high, and pullbacks across the space certainly are possible. But the technology has staying power; companies won’t quickly ditch the benefits they’re capturing from cloud apps after offices re-open, if they ditch them at all. Thus, many cloud stocks’ opportunities should extend well into the future.
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Growth investing is a stock-buying strategy that aims to profit from firms that grow at above-average rates compared to their industry or the market. In addition, there also are human-resources software stocks such as Paycom Holdings and Paylocity Holdings . Paycom and others have exposure to small and medium-size businesses shut down by the coronavirus pandemic. In addition, Microsoft has pivoted to cloud computing and software-as-a-service. It was recently was featured as an IBD Stock of the Day, giving readers a close look at its technical and fundamental performance. Meanwhile, ServiceNow stock ranks No. 46 in the IBD 50 roster of fast-growing companies. ServiceNow’s self-service tech portal enables company employees to access administrative and workflow tools.
The company, which went public in April 2019, has exploded by 600% from its IPO price of $36 per share. That includes a 270% performance in 2020 – a performance reminiscent of run-ups during the dot-com bubble. Zoom Video Communications (ZM, $252.33) is the poster child for what cloud applications can do for a portfolio, and one of the best cloud stocks of 2020. However, at the moment, it might also be signaling that the industry has entered a bubble phase. Twilio, which went public in mid-2016, has seen its sales exploded four-fold since then, to $1.13 billion in 2019. The company now serves more than 190,000 organizations, from startups and nonprofits to governments and Fortune 500 companies.
- Over the past several quarters, Twilio has emerged as the unchallenged leader in the rapidly growing Communication Platforms-as-a-Service market.
- Japan has a set of large trading conglomerates that are involved in resourcing commodities, providing logistics services, and running various businesses.
- It effectively automates agreement processes to save costs for businesses.
- By working in software, fast-growing customers can maintain a global footprint without having to invest in remote servers.
- Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice.
- Economic reality is that long-term real interest rates are negative, the Federal Reserve is flooding the market with cheap credit, and the current economic slowdown is temporary.
And that user base and the obvious utility of its service makes Dropbox an intriguing acquisition target, with Microsoft and Salesforce among the speculated buyers. Dropbox has an enormous base of users — well over 500 million at the end of the second quarter. The number of paying users continues to grow, as does average revenue per user. As I noted in calling out 2U as one of the quarter’s biggest losers, there are risks in trying to time the bottom. There’s a real question as to whether the online education space will be as profitable as hoped.
Just check out thislistor thislistof Adobe Photoshop alternatives. Nor do any of them offer products even close in quality to Adobe’s offerings. As such, this creative solutions business is a stable growth business with a huge moat and no competition, implying healthy revenue and profit growth for the foreseeable future. The company recently promoted several executives, which is expected to strengthen its leadership and technical capabilities. It also recently executed a public offering, the proceeds from which are expected to be used for the expansion of the company’s data center infrastructure.