“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 for July...
1. Dropbox, Inc. (DBX - Free Report)
Dropbox is a cloud storage firm that refers to itself as “global collaboration platform.” The San Francisco-headquarter company, which went public last March, has amassed over 500 million registered users around the globe and is working hard to convert more into paying customers, with a special focus on business clients. DBX’s paid users hit 13.2 million in Q1 2019, up from 11.5 million in the year-ago period. In early June, Dropbox announced the “biggest user-facing change” in company history that creates “one central location for all content,” including the Google Docs, Microsoft (MSFT - Free Report) offerings, Slack (WORK - Free Report) , and more. DBX introduced its new “Workspace” after it reported better-than-projected results last quarter and raised its full-year revenue forecast.
Shares of Dropbox have been on a bit of a roller coaster ride in 2019, but are up 24% overall so far this year and 15% in the past three months. Looking ahead, the company’s full-year fiscal 2019 revenue is projected to jump 18% to reach $1.64 billion, based on our current Zacks Consensus Estimates. The company’s adjusted 2019 EPS figure is expected to come in flat from 2018’s $0.41 per share. But DBX’s 2020 earnings are projected to surge roughly 35% above our current-year estimate to $0.56. Dropbox has also crushed our quarterly earnings estimates in the trailing four periods by an average of 65%. DBX is a Zacks Rank #1 (Strong Buy) at the moment that also sports an “A” grade for Growth and a “B” for Momentum in our Style Scores system.
2. ServiceNow (NOW - Free Report)
ServiceNow offers its clients the chance to digitize and automate some of their businesses and operations. 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) .
The firm is coming off a better-than-expected Q1 and just announced on Tuesday an expanded partnership with Microsoft that will help ServiceNow sell to highly regulated industries and house its full SaaS offerings on MSFT’s Azure cloud. NOW stock, which hit a new high of $302.99 a share Wednesday, has skyrocketed 68% in 2019 and 334% in the past three years. Peeking ahead, the company’s adjusted fiscal 2019 EPS figure is projected to jump 28.5% on the back of 32% higher revenue. In 2020, the firm’s revenues are projected to climb 28% above our 2019 estimate to reach $4.41 billion, while earnings are expected to surge 35% higher. ServiceNow is a Zacks Rank #2 (Buy) right now and is set to release its Q2 2019 financial results on July 24.
3. Veeva Systems Inc. (VEEV - Free Report)
Like its cloud peer, NOW, shares of Veeva Systems also hit a new high of $176.62 per share in morning trading Wednesday. VEEV, which offers cloud-based solutions for the pharmaceutical and life sciences industries, stock is now up over 94% in 2019 to destroy its industry’s 36% average climb. Veeva’s software-as-a-service model helps deliver industry-specific tools for customer relationship management, content management, and many other enterprise applications.
Moving on, Veeva’s adjusted Q2 earnings are projected to jump 25.6% on the back of nearly 24% revenue expansion. Meanwhile, the cloud company’s full-year revenue is expected to climb 21.9% to reach $1.05 billion to help earnings jump by 24.5% to $2.03. Veeva’s earnings estimate revision picture has also trended almost completely upward since its latest earnings release, especially for fiscal 2020 and 2021, to help it earn a Zacks Rank #2 (Buy) at the moment. And VEEV sports an “A” grade for Growth in our Style Scores system.
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