5 Growth-Focused Cloud Stocks to Buy Amid Coronavirus Crisis
The coronavirus-induced work-and-play-from-home trend has been a boon for cloud providers.
The shelter-in-place orders have fueled the demand for remote project collaborations, video conferencing, online classes, gaming, and e-commerce shopping all powered by the cloud computing technology.
Storing and managing an enormous amount of data are of utmost importance, and cloud computing firms are emerging as key players in this regard. A number of companies are expecting their cloud usage to exceed plans due to the impacts of the COVID-19 pandemic.
However, growing usage of cloud-based services is aggravating security lapses, inducing risks of hacking and phishing mails in the garb of coronavirus as the subject. Also, usage of own devices and equipment that are not properly configured or can be infected with malware during teleworking or accessing information to and from cloud raises possibilities of security breaches for enterprises. This is driving demand for cloud-based security service solutions.
Cloud Business Poised to Grow
In addition, the strong adoption of software-as-a-service (SaaS) cloud-computing model presents significant growth opportunity for industry players. SaaS offers a flexible and cost-effective delivery method of applications and the deployment time is also much shorter than legacy systems.
In view of the pandemic, the global cloud computing market is projected to increase from $371.4 billion in 2020 to $832.1 billion by 2025 at a CAGR of 17.5%, per a ResearchAndMarkets.com report.
With demand for cloud-based solutions growing, enterprises are turning to software companies for providing digital infrastructure with lower hardware cost and exquisite features. International Business Machines Corporation IBM is just one among those.
IBM’s second-quarter cloud revenues of $6.3 billion jumped 30% year over year, as demand for cloud needs increased. Cloud business is working miracles for many companies as large corporations accelerated their digital shift due to the coronavirus crisis.
In July, Alibaba Group Holdings partnered with Equinox, Inc. to expand its cloud services to markets in Europe, America and Asia Pacific.
Moreover, Microsoft Corporation MSFT and SAS jointly announced in June a strategic partnership, making Azure the preferred cloud platform for the latter’s analytics portfolio. The two companies will enable customers to easily run their SAS workloads in the cloud, expanding their business solutions and unlocking critical value from their digital transformation initiatives.
Our Picks
Given the uproar in cloud technology, we have shortlisted five stocks that are poised to grow from the pandemic-induced remote working trend and long-term shift to global digitalization.
These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) and have outperformed the S&P 500 in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, the stocks have a Growth Score of A or B. Per Zacks’ proprietary methodology, stocks with such favorable combinations offer solid investment opportunities.
Year-to-Date Performance
Zoom Video ZM continues to add a record number of subscribers and expand its enterprise customer base amid the COVID-19-induced remote-working and online-learning wave. Its ease of deployment, use, management, and scalability make Zoom Video’s software popular.
Moreover, the company’s efforts to eliminate the security and privacy loopholes are expected to help it maintain the existing enterprise user base and attract more customers.
Zoom Communications currently sports a Zacks Rank of 1 and has a Growth Score of A. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised upward by 78% in the past 60 days to $2.26 per share.
Etsy ETSY has been benefiting from increasing subscribers and expanding enterprise customers on its cloud-powered online and offline marketplaces to buy and sell goods. The company's product line comprises art, home and living, mobile accessories, jewelry, and wedding merchandise et al.
The coronavirus pandemic has created a new e-commerce environment. Buyers are shifting gears to online shopping from conventional outlets, which is driving this Zack Rank #1 company’s top-line growth.
Etsy currently carries a Growth Score of A. The consensus mark for the company’s 2020 earnings has moved up 88.1% to $2.05 per share over the past 60 days.
Box BOX has been benefiting from its growing customer base and strong cloud storage demand. This Zacks Rank #2 company provides a single place to secure, share, and manage all of the content for an organization’s internal and external collaborations and processes. Integration with other software like Microsoft Office 365, Google Apps for Work, Adobe and salesforce is likely to enhance Box’s user base.
Box currently carries a Growth Score of A. The consensus mark for the company’s fiscal 2021 earnings has moved up 15% to 57 cents per share over the past 60 days.
EPAM Systems EPAM is well poised to gain from the robust uptick in demand for its services related to cloud utilization especially Cloud Computing Service (C2S), which provides cloud infrastructure and related resources as a high scale, multi-tenant private IaaS service.
Other cloud services provided by this Zacks Rank #2 company include networking, block storage, infrastructure scheduling and cloud security services among others.
EPAM currently carries a Growth Score of A. The consensus mark for the company’s 2020 earnings has moved up 5.5% to $5.86 per share over the past 60 days.
Dropbox DBX has been riding on the robust adoption of its latest desktop app driven by the coronavirus crisis, which triggered demand for cloud storage. This Zacks Rank #2 company offers a platform that enables users to access, store, synchronize and share files, photos, videos, songs, and spreadsheets.
Dropbox currently has a Growth Score of A. The consensus mark for the company’s fiscal 2020 earnings has moved up 4.1% to 77 cents per share over the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report
Box, Inc. (BOX) : Free Stock Analysis Report
Etsy, Inc. (ETSY) : Free Stock Analysis Report
Dropbox, Inc. (DBX) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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