Are These Cloud Stocks On Your List Of Best Stocks To Buy Now?
Cloud stocks have been fantastic buys for investors seeking out growth this year. Let’s face it, cloud computing is the name of the game right now. But it is easy to overlook the fact that success doesn’t come overnight. These companies have been laying their groundwork for years, allowing inventors to reap the benefits today. While the COVID-19 pandemic has been a disaster for the stock market today, some cloud computing stocks are taking off very quickly. This came as the pandemic accelerated changes in the technology industry. Social distancing measures are benefiting companies who provide various technological solutions to businesses. The momentum could continue as higher adoption led users to stick to these solutions over time. You can think of it as a “new normal” for tech.
Cloud computing is a high-growth industry that’s being bid up to the… clouds. There’s no denying that valuations are high. Some say these top cloud stocks are priced to perfection. Some corrections every now and then are certainly possible. But technology is sticky. Many companies are not going to uproot their software abruptly. The benefits from cloud apps will continue to manifest even after offices reopen. Thus, many of the best cloud stocks to watch will continue to benefit. Let’s put it this way. You can think of it as the growth being pulled forward, but there is still plenty of growth ahead.
Alibaba’s Cloud Computing To Be Profitable For The First Time, Another Welcoming Sign For Top Cloud Stocks
The Chinese e-commerce giant Alibaba (BABA Stock Report) expects its cloud business to become profitable in this fiscal year, for the first time. This will provide some sort of reassurance for inventors who are skeptical about the cloud industry. After all, many of them have yet to reach profitability. Recall that current Chairman and CEO Daniel Zhang told CNBC in a 2018 interview that cloud computing would be Alibaba’s “main business” in the future.
In pretty much the same way as Amazon (AMZN Stock Report), Alibaba’s cloud service arose from the computational power required for large volumes of e-commerce transactions. And soon enough, the cloud business becomes a formidable source of revenue on its own. Globally, Alibaba’s cloud service competes with Amazon Web Services, Microsoft Azure, and Google Cloud Platform. No matter how you put it, you can’t deny that some of these cloud computing companies continue to have a lot of potentials. The reality is, people are spending more time online, and cloud services are a fundamental part of the modern web. That said, are the following cloud stocks on your watchlist?
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Top Cloud Stocks To Watch In October 2020: Asana
Asana (ASAN Stock Report) is one of the two highly anticipated companies to go public through a direct listing; Palantir is the other. For investors who are new to the company, Asana is a specialist in workplace collaboration and planning software. The company’s stock price had opened at $27.
That’s above the $21 reference price announced by the New York Stock Exchange for the company’s direct listing. The company saw 40.4 million shares exchanged hands, just over a quarter of total shares outstanding. Asana does not have a lockup period, and hence its employees and insiders are free to trade.
Investors have been snapping up stock in a theme that has played out well in recent months. That’s especially true when it comes to cloud computing stocks. With so many cloud stocks doubling in value after their IPOs, such as the ones we saw with Snowflake (SNOW Stock Report) or Unity (U Stock Report), there were great expectations that ASAN stock would perform in a similar fashion.
Top Cloud Stocks To Watch In October 2020: Palantir Technologies
Palantir Technologies (PLTR Stock Report), a data analytics company, made its public debut through a direct listing on Wednesday. Due to the name recognition of its founders and the secretive nature of the company’s business, Palantir is getting a lot more attention than other companies slated to carry out their initial public offerings (IPOs) this week. As you may or may not have noticed, Palantir’s revenue has accelerated in the first half of 2020 to 49% well above the 25% growth posted in 2019. Part of that may be due to higher usage during the pandemic by the U.S. Department of Health and Human Services, a client of Palantir.
Palantir doesn’t just have growing revenues. The company appears to be on track to raise contribution margins. That’s important because it shows the actual profitability of the business in comparison to variable expenses. That can give us a better idea of how Palantir’s bottom line will do in the future as the company grows its revenue.
The big question here is for investors where Palantir shares will go from here. This is a solid business with strong relationships with U.S. government agencies. Given that PLTR stock has not jumped as much as the other IPOs, would you be tempted to make a buying move before it goes up more? Palantir is aiming to achieve a revenue of $1 billion in 2020. At a valuation of 20 times sales, it looks fairly affordable by software standards. Unless you want to compare it to defense companies, in which case PLTR looks expensive. With the company’s strength in data analytics, will you be willing to bet on the company that could protect the country’s interests during a time of geopolitical tensions?
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Top Cloud Stocks To Watch In October 2020: Limelight Networks
If you are looking for tech stocks under $10, content delivery network (CDN) specialist Limelight Networks (LLNW Stock Report) might just be the one. The company’s revenue is skyrocketing due to the booming demand for high-quality content delivery solutions. That’s because every new streaming media launch over the past year has Limelight as their service provider, including Disney+ and Peacock platform NBCUniversal.
The company operates in the business of edge computing, which focuses on speeding up the delivery of content. While Limelight Networks may not be as well known as Fastly (FSLY Stock Report), it is not just a cameo in video streaming. Investors in the stock appear to be finally seeing rewards for their patience. Limelight saw strong revenue growth of over 25% for the past three quarters. And that is certainly bucking the trend of flat growth in the earlier years.
Many experts believe that this is merely the start of a long-lasting period of powerful growth in the making. The fact that Disney and Comcast require Limelight’s solutions instead of alternative solutions speaks volumes for Limelight’s capabilities. Perhaps, Limelight is finally in the … limelight. With that in mind, would you include LLNW stock in your list of top cloud stocks to buy moving forward?
