Credit: Shutterstock photoIn the matter of just a few years, "the Cloud" has evolved from the new feature that your grandmother just can't quite seem to understand 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. Five9, Inc. (FIVN)
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 #2 (Buy).
Five9 is still a loss-making company, but it has a strong record of surpassing earnings estimates, and we have seen one positive estimate revision for its current-quarter earnings within the past 30 days. In fact, Five9 currently has a positive Earnings ESP of 20%, and along with its strong Zacks Rank, this is a solid indicator that the company could be poised to beat earnings again. Finally, this stock currently has an "A" grade for Growth and its projected sales growth looks impressive.
2. Exa Corporation (EXA)
Exa is a developer of computer-aided engineering simulation software, primarily in the fluid dynamics space. Over the past couple of years, the company has emerged as a cloud player thanks to its ExaCLOUD platform, which gives customers access to its entire simulation suite via a web browser. EXA is currently a Zacks Rank #1 (Strong Buy).
Year-over-year EPS comparisons will be challenging this year, but we've seen positive revisions for its full-year and next-year estimates, and our current revenue estimates are calling for sales to continue to grow steadily. The stock has actually dropped year-to-date, but the company has surpassed our earnings expectations in nine consecutive quarters, so this dip could provide a nice buying opportunity ahead of its effort to extend that streak to ten.
3. Adobe Systems (ADBE)
Adobe Systems is a provider of graphic design, publishing, and imaging software for Web and print production. The company's main offering is its "Creative Cloud," which is a software-as-a-service (SaaS) product that allows users to access all of Adobe's tools at one monthly price. The stock currently has a Zacks Rank #2 (Buy).
With five positive revisions in the past 30 days helping to send Adobe's current-quarter Zacks Consensus Estimate three cents higher, this stock is trending in the right direction heading into earnings season. It's also a growth pick, with EPS and sales growth expected to touch 37% and 24%, respectively, this quarter. Adobe also sports better-than-average margins and RoE.
Bottom Line
Cloud-based companies have been some of the best performing stocks in the tech sector this year, and these cloud stocks also boast strong fundamental metrics. If you're looking to add tech stocks to your portfolio right now, this list is probably a good place to start.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
