"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 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, and Google GOOGL. 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 cloud stocks to consider right now.
1. Veeva Systems Inc. VEEV
Veeva Systems offers cloud-based solutions for the pharmaceutical and life sciences industries. Veeva's software-as-a-service model helps deliver industry-specific tools for customer relationship management, content management, and many other enterprise applications. Veeva shares have skyrocketed 87% so far this year to help it reach multiple new all-time highs. This includes a significant post-Q1 financial release jump after it soared past our quarterly earnings estimate on May 29. In fact, Veeva's adjusted first-quarter fiscal 2020 EPS figure surged 51% from the year-ago period on the back of 25% revenue expansion.
Moving on, Veeva's growth is projected to continue in the second quarter, with our current Zacks Consensus Estimates calling for its adjusted Q2 earnings 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 climb by 24.5%. Plus, Veeva's earnings estimate revision picture has 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. VEEV also sports an "A" grade for Growth in our Style Scores system.
2. Twilio TWLO
Twilio's cloud communication platforms and services handle calls, text messages, videos, web and mobile chats, and call-centers. TWLO's APIs allow firms to "outsource" these tasks to its cloud services so they can focus on the development of their core business. The San Francisco-based firm boasts clients like Intuit INTU, Yelp YELP, VMware VMW, Lyft LYFT, and many more. Shares of TWLO have skyrocketed over 450% in the last two years and have climbed roughly 60% in 2019. TWLO is coming off a first quarter of fiscal 2019 that saw its revenue soar 81%. This came after its full-year fiscal 2018 revenue jumped 63% to $650.1 million.
Looking ahead, our current Zacks Consensus estimate calls for its Q2 revenue to soar 78.4%, with full-year 2019 projected to jump roughly 70% to reach $1.10 billion. Investors should note that these estimates include the expected positive impact from its purchase of email API platform firm, SendGrid, which was completed on February 1. The firm is projected to post adjusted full-year earnings of $0.11 per share, flat from the year-ago period. Peeking ahead to fiscal 2020, TWLO's adjusted full-year EPS is projected to skyrocket 123% above our 2019 estimate to $0.25 per share. Twilio is currently a Zacks Rank #3 (Hold) that investors should think of as a growth play and a way to gain exposure to the expanding cloud computing market.
3. Microsoft MSFT
Shares of Microsoft touched yet another new 52-week high Tuesday, with MSFT stock up 29% in 2019 and 86% in the past two years. The firm's cloud business has become one of its biggest growth drivers in recent years. Last quarter, Intelligent Cloud revenue popped 22%, with the Azure division up 73%. Microsoft, which is currently the world's most valuable public firm, has a mixture of cloud, IoT, and artificial intelligence deals with giants such as Walmart WMT. More recently, MSFT partnered with gaming rival Sony SNE on a new cloud gaming venture.
MSFT's upcoming adjusted fourth-quarter fiscal 2019 earnings are projected to climb 7% on the back of 8.8% revenue growth. These moves are expected to help the company's full-year EPS figure surge 18%, with revenue up 13% to $124.86 billion. Furthermore, the historic tech giant's full-year fiscal 2020 revenue is projected to jump 10.6% above our 2019 estimate, with earnings expected to climb 11.2%. Unlike TWLO, Microsoft is not a home run-style investment. Instead, Microsoft looks poised for stable low double-digit growth, pays a dividend, has relatively solid valuation metrics, and is a Zacks Rank #2 (Buy) at the moment.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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