In a matter of just a few years, “the Cloud” has evolved from a budding new tech feature to one of the main factors driving growth in the technology sector. Cloud computing is now an essential focus for software-related companies, and cloud stocks have piqued the interest of many tech-focused investors.
New technologies and changing consumer behavior have changed the shape of the technology landscape, and an industry that was once centered on the personal computer has adapted to survive in the world of mobile computing and the Cloud. The markets have been paying attention, and some of the best tech stocks have been those that are either primarily cloud-based companies, or those that have shown growth in their cloud operations.
With this in mind, we’ve highlighted three stocks that are not only showing strong cloud-related activity, but also strong fundamental metrics. Check out these three cloud stocks to buy right now:
1. Progress Software Corporation (PRGS - Free Report)
Progress develops software and cloud-based products that assist clients with application deployment, application management, data connectivity, web content management, and predictive analytics. The company has shifted its focus to cloud computing and is looking to expand its cloud subscription offerings. Currently, PRGS is a Zacks Rank #2 (Buy).
In its recently-reported quarter, the firm surpassed earnings estimates for the six-consecutive period, inspiring some positive estimate revisions for upcoming quarters. This is a stock to love based on its earnings growth, with consensus estimates calling for EPS expansion of 29% this quarter and 24% for the full fiscal year. But shares are also trading at an attractive 15.8x forward 12-month earnings.
2. Appfolio, Inc. (APPF - Free Report)
AppFolio offers cloud-based software solutions for the property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. AppFolio has found consistent profitability, and investors have rewarded the stock with 66% gains over the past year.
APPF is currently sporting a Zacks Rank #2 (Buy), as well as an “A” grade for Growth in our Style Scores system. The stock will hope to maintain its momentum with continued bottom-line expansion, with current consensus estimates projecting EP growth of 37% on net sales growth of 26% this year.
3. Paycom Software, Inc. (PAYC - Free Report)
Paycom Software is a provider of a cloud-based human capital management software solution delivered as Software-as-a-Service. Paycom was one of the first fully online payroll options out there, so this is a really interesting example of a company that has that first-mover advantage and industry leading product that still has a mountain of growth ahead of it.
PAYC is currently sporting a Zacks Rank #1 (Strong Buy). Based on our latest consensus estimates, we expect the company to witness EPS growth of 89% and revenue growth of 26% in its current fiscal year. Looking further ahead, Paycom is projected to improve its bottom line at an annualized rate of nearly 25% over the next three to five years. Shares are trading at an expensive 45x forward 12-month earnings, but its PEG ratio of 1.8 is actually quite attractive.
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