“The Cloud” has evolved from a budding innovation in tech into one of the largest factors driving growth in the technology sector in only a few years. Today, cloud computing is an integral part of software-related firms, which in turn has seen investors search for cloud-focused tech stocks.
In our increasingly mobile world, cloud computing has dramatically reshaped the way companies conduct business. The technology allows firms big and small, as well as individuals, to access all their vital information nearly anywhere. Cloud computing like the smartphone, is hardly a fad, and it seems nearly impossible to think that people will reverse course—unless the cybersecurity concerns become too high.
Think how much market share Amazon’s (AMZN - Free Report) AWS cloud business was able to gain based on its significant head start into the now booming market over rivals and fellow giants Microsoft, IBM (IBM - Free Report) , and Google (GOOGL - Free Report) . With this in mind, we have highlighted three stocks that are not only showing strong cloud-related activity but also some strong fundamentals.
Check out these three Zacks buy-ranked cloud stocks to consider right now.
1. ServiceNow (NOW - Free Report)
ServiceNow offers its clients the chance to digitize and automate some of their business and operations, which is a market that looks poised to grow quickly. The Santa Clara, California-based company’s cloud platform and solutions help with everything from IT to employee and customer workflows. Fortune ranked ServiceNow No. 3 on its “Future 50” list of global companies “with the best prospects for long-term growth” last year, behind only Weibo (WB - Free Report) and Workday (WDAY - Free Report) and ahead of giants such as Salesforce (CRM - Free Report) and Netflix (NFLX - Free Report) .
Meanwhile, the firm which was also Forbes’ No. 1 World’s Most Innovative Company in 2018, is coming off a better-than-expected Q1 and just announced that it is set to acquire Israel-based application analytics platform firm Appsee’s in-app mobile analytics platform and R&D talent. Shares of NOW have soared nearly 50% in 2019 and are up roughly 275% in the last three years to help crush its industry’s 55% average climb. Looking ahead, our Zacks Consensus Estimates call for the firm’s current full-year adjusted earnings to jump 28.5% on the back of 32% revenue growth. ServiceNow is then projected to see its EPS figure come in 34% higher than our 2019 estimate next year, with revenue expected to soar 28% from a projected $3.44 billion to $4.41 billion in 2020. ServiceNow is currently a Zacks Rank #2 (Buy) that sports a “B” grade for Growth in our Style Scores system.
2. Microsoft (MSFT - Free Report)
Microsoft topped both earnings and revenue estimates on April 24. Much of the focus once again fell on its Intelligent Cloud business, which saw its revenue jump 22%. More specifically, Microsoft’s key Azure division sales skyrocketed 73%. Microsoft’s expansion into new growth areas, such as cloud and IoT, along with the continued strength of its core businesses, is expected to help MSFT post 13.1% revenue growth in fiscal 2019. On top of that, our Zacks Consensus Estimate calls for the company’s fiscal 2020 revenues to jump 10.6% above our current-year estimate to reach $138.09 billion.
At the bottom end of the income statement, MSFT’s full-year earnings are projected to surge 18%, with 2020’s EPS figure expected to jump 11.4% higher than our 2019 estimate. Microsoft has also seen a ton of positive longer-term earnings estimate revision activity since it posted its Q3 2019 results, which helps it earn a Zack Rank #2 (Buy). Moreover, MSFT is a dividend payerthat has paid out a $0.46 per share quarterly dividend throughout its fiscal 2019, up 9.5% from the prior year’s quarterly payout. Meanwhile, the company’s dividend yield rests at 1.45%, with Microsoft shares up 22% in 2019 and 81% over the last two years.
3. Veeva Systems Inc. (VEEV - Free Report)
Veeva makes cloud-based solutions for the pharmaceutical and life sciences industries. Its main offerings are presented in a software-as-a-service model and deliver industry-specific tools for customer relationship management, content management, and many other enterprise applications. Shares of VEEV have skyrocketed 78% over the last 12 months and 53% in 2019, to help the company hit multiple new highs along the way.
Peeking ahead, our current Zacks Consensus Estimate calls for the company’s first quarter fiscal 2020 revenue—which is due on May 29—to jump over 22% to reach $238.7 million. Meanwhile, Veeva’s full-year revenue is expected to surge nearly 20% to reach $1.03 billion. At the bottom end of the income statement, the company’s adjusted Q1 earnings are projected to pop 36.4%. Furthermore, Veeva’s positive, short-term and longer-term earnings estimate revision activity helps it earn a Zacks Rank #2 (Buy) at the moment. VEEV also rocks a “B” grade for growth in our Style Scores system.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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