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. 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. APPF is holding a Zacks Rank #2 (Buy) right now.
AppFolio has locked down consistent profitability in recent quarters, crushing estimates by posting earnings of $0.24 per share in its most recent quarter. Now, forward-looking estimates are trending upward, and AppFolio’s full-year earnings growth is expected to touch 93% in 2018. But that is expected to continue to the tune of another 55% next year. This is also a hot momentum play as shares have surged more than 15% in the past month to reach new highs.
2. 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 103% and revenue growth of 28% in its current fiscal year. Looking further ahead, Paycom is projected to improve its bottom line at an annualized rate of over 25% over the next three to five years. Shares are trading at an expensive 60x forward 12-month earnings, but its PEG ratio of 2.4 is actually quite reasonable.
3. Five9, Inc. (FIVN - Free Report)
Five9 provides cloud software for contact centers. The company offers software products such as workforce management, speech recognition, predictive dialer, and voice applications, as well as an all-in-one contact center cloud platform. Currently, FIVN holds a Zacks Rank #1 (Strong Buy).
FIVN is on fire after crushing earnings estimates last month, and now the company is looking for even great bottom-line growth. Earnings are expected to improve by 264% this year and 32% next year on the back of 23% and 18% projected revenue growth. Shares are now up nearly 60% in six months and continue to test new all-time highs, with earnings expansion likely to inspire further momentum.
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