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3 Cloud-Focused Tech Stocks to Buy for Growth Far Beyond the Coronavirus
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Stocks surged again Monday, with the tech-heavy Nasdaq Composite closing at its first record since February. Meanwhile, the S&P 500 jumped into positive territory for the year, having erased a 30% coronavirus-induced fall.
Countries around the world are slowly emerging from their pandemic comas, which means the worst is most likely behind us in terms of economic devastation. In fact, the recent positivity comes on the heels of Friday’s better-than-expected May jobs data that helped show the economic recovery from the coronavirus lockdown is underway. Investors should also remember that Wall Street’s “don’t fight the Fed” mode seems poised to remain good news for stocks.
That said, many companies from giants like Disney (DIS - Free Report) to small-cap players, face a rough near-term outlook. Luckily, tech stocks that boast stronger fundamentals and are able to remain somewhat immune to the downturn have helped drive this rally. This group clearly includes the titans Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Facebook , and others. Adobe (ADBE - Free Report) and other tech stocks that are ready to thrive in the remote-work world have hit new highs as well.
With this in mind, investors likely want to find stocks within industries that are not only pandemic resilient, but ready to expand when the coronavirus is in the rearview...
Datadog’s cloud software for businesses is used to monitor the performance of databases, servers, apps, networks, and more. DDOG went public in September 2019 and surged 40% above its IPO price on its debut. The company’s cloud-based SaaS offerings have attracted well-known clients, including the likes of Deloitte, FedEx (FDX - Free Report) , and Pelton PTON, and it continues to add larger customers. DDOG closed Q1 with 960 customers with annual recurring revenue of $100,00 or higher, which marked a 90% jump from the year-ago period.
The company crushed our first quarter fiscal 2020 earnings estimate on May 11, with revenue up 87%. DDOG also recently launched its Security Monitoring offering and surpassed over 400 out-of-the-box supported integration. “This crisis has demonstrated the need to be digital-first and agile, has underscored the importance of observability into cloud environments, and reaffirmed the long-term opportunity for Datadog,” CEO Olivier Pomel said in prepared Q1 remarks.
Looking ahead, our Zacks estimate calls for the monitoring and analytics platform firm’s fiscal 2020 sales to climb 55% to $562.3 million, which would come on top of FY19’s 83% sales growth. DDOG is also expected to swing from an adjusted loss of -$0.01 per share last year to +$0.03 in fiscal 2020 and +$0.05 a share in FY21.
Datadog’s bottom-line revision positivity helps it earn a Zacks Rank #2 (Buy) right now. DDOG also sports “B” grades for Growth and Momentum in our Style Scores system and is part of an industry that rests in the top 12% of our more than 250 Zacks industries. DDOG shares are up nearly 100% in 2020 and 160% since mid-March. Datadog stock recently touched new highs, and its valuation showcases that it’s purely a growth play for now.
DocuSign, which went public in late April 2018, allows businesses and other organizations the ability to sign contracts and documents electronically on “practically any device, from almost anywhere, at any time.” DOCU’s offerings are increasingly valuable is our digital-focused business world. Last spring, DOCU rolled out its DocuSign Agreement Cloud to help firms “automate and connect” their “entire agreement process.” The cloud-based suite offers over a dozen apps for e-signature, document generation, contract lifecycle management, and more, with industry and department-specific solutions.
Investors should also note that DocuSign’s Agreement Cloud has hundreds of pre-built integrations with other applications, including giants such as Microsoft (MSFT - Free Report) , Google (GOOGL - Free Report) , and Salesforce (CRM - Free Report) . DocuSign boasts over half a million customers around the world and on June 4 it topped our Q1 estimates, with sales up 39% and adjusted earnings up over 70%.
DOCU’s fiscal 2021 revenue is projected to jump 34%, with its FY22 sales expected to climb another 27% higher. And its adjusted earnings are expected to soar 55% and 61%, respectively over this same stretch. DocuSign’s positive earnings revisions help it hold a Zacks Rank #2 (Buy) right now. And DOCU shares have skyrocketed 190% in the last 12 months and 90% in 2020 to destroy its industry’s sideways movement.
Zoom was one of the first star coronavirus stocks, given its ability to connect people via video, voice, chat, and content sharing. The firm, which public in April 2019, boasts that its cloud-native platform can connect “thousands of people in a single meeting across disparate devices and locations."
Even as the economy starts to reopen, there is no guarantee that companies, especially in big cities with public transportation, will race back to the office. Plus, firms that find the remote environment relativity seamless might cut back on rent and commercial real estate expenses. And Zoom was already growing before the pandemic.
Zoom on June 2 crushed our Q1 earnings estimate by 100%, while its revenue skyrocketed 169% to hit $328.2 million, which also destroyed our estimate. ZM closed the first quarter, ended on April 30, with around 265,400 customers with more than 10 employees, up 354% from the year-ago period. Perhaps more importantly, customers contributing more than $100,000 in trailing 12-month revenue climbed 90% to 769.
Moving on, Zoom’s Q2 revenue is projected to climb 241%, with its FY21 sales set to surge 189%. ZM’s adjusted Q2 earnings are projected to soar 462%, with its full-year figure expected to expand by 237%. Zoom shares hit a new high following its Q1 release, but its stock now rests roughly 9% off its highs as investors take home some profits on a stock that’s up nearly 200% in 2020. Zoom is Zacks Rank #1 (Strong Buy) that earns an “A” grade for Momentum and a “B” for Growth, and is part of a highly-ranked Zacks industry.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
3 Cloud-Focused Tech Stocks to Buy for Growth Far Beyond the Coronavirus
Stocks surged again Monday, with the tech-heavy Nasdaq Composite closing at its first record since February. Meanwhile, the S&P 500 jumped into positive territory for the year, having erased a 30% coronavirus-induced fall.
Countries around the world are slowly emerging from their pandemic comas, which means the worst is most likely behind us in terms of economic devastation. In fact, the recent positivity comes on the heels of Friday’s better-than-expected May jobs data that helped show the economic recovery from the coronavirus lockdown is underway. Investors should also remember that Wall Street’s “don’t fight the Fed” mode seems poised to remain good news for stocks.
That said, many companies from giants like Disney (DIS - Free Report) to small-cap players, face a rough near-term outlook. Luckily, tech stocks that boast stronger fundamentals and are able to remain somewhat immune to the downturn have helped drive this rally. This group clearly includes the titans Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Facebook , and others. Adobe (ADBE - Free Report) and other tech stocks that are ready to thrive in the remote-work world have hit new highs as well.
With this in mind, investors likely want to find stocks within industries that are not only pandemic resilient, but ready to expand when the coronavirus is in the rearview...
Datadog, Inc. (DDOG - Free Report)
Datadog’s cloud software for businesses is used to monitor the performance of databases, servers, apps, networks, and more. DDOG went public in September 2019 and surged 40% above its IPO price on its debut. The company’s cloud-based SaaS offerings have attracted well-known clients, including the likes of Deloitte, FedEx (FDX - Free Report) , and Pelton PTON, and it continues to add larger customers. DDOG closed Q1 with 960 customers with annual recurring revenue of $100,00 or higher, which marked a 90% jump from the year-ago period.
The company crushed our first quarter fiscal 2020 earnings estimate on May 11, with revenue up 87%. DDOG also recently launched its Security Monitoring offering and surpassed over 400 out-of-the-box supported integration. “This crisis has demonstrated the need to be digital-first and agile, has underscored the importance of observability into cloud environments, and reaffirmed the long-term opportunity for Datadog,” CEO Olivier Pomel said in prepared Q1 remarks.
Looking ahead, our Zacks estimate calls for the monitoring and analytics platform firm’s fiscal 2020 sales to climb 55% to $562.3 million, which would come on top of FY19’s 83% sales growth. DDOG is also expected to swing from an adjusted loss of -$0.01 per share last year to +$0.03 in fiscal 2020 and +$0.05 a share in FY21.
Datadog’s bottom-line revision positivity helps it earn a Zacks Rank #2 (Buy) right now. DDOG also sports “B” grades for Growth and Momentum in our Style Scores system and is part of an industry that rests in the top 12% of our more than 250 Zacks industries. DDOG shares are up nearly 100% in 2020 and 160% since mid-March. Datadog stock recently touched new highs, and its valuation showcases that it’s purely a growth play for now.
DocuSign (DOCU - Free Report)
DocuSign, which went public in late April 2018, allows businesses and other organizations the ability to sign contracts and documents electronically on “practically any device, from almost anywhere, at any time.” DOCU’s offerings are increasingly valuable is our digital-focused business world. Last spring, DOCU rolled out its DocuSign Agreement Cloud to help firms “automate and connect” their “entire agreement process.” The cloud-based suite offers over a dozen apps for e-signature, document generation, contract lifecycle management, and more, with industry and department-specific solutions.
Investors should also note that DocuSign’s Agreement Cloud has hundreds of pre-built integrations with other applications, including giants such as Microsoft (MSFT - Free Report) , Google (GOOGL - Free Report) , and Salesforce (CRM - Free Report) . DocuSign boasts over half a million customers around the world and on June 4 it topped our Q1 estimates, with sales up 39% and adjusted earnings up over 70%.
DOCU’s fiscal 2021 revenue is projected to jump 34%, with its FY22 sales expected to climb another 27% higher. And its adjusted earnings are expected to soar 55% and 61%, respectively over this same stretch. DocuSign’s positive earnings revisions help it hold a Zacks Rank #2 (Buy) right now. And DOCU shares have skyrocketed 190% in the last 12 months and 90% in 2020 to destroy its industry’s sideways movement.
Zoom Video (ZM - Free Report)
Zoom was one of the first star coronavirus stocks, given its ability to connect people via video, voice, chat, and content sharing. The firm, which public in April 2019, boasts that its cloud-native platform can connect “thousands of people in a single meeting across disparate devices and locations."
Even as the economy starts to reopen, there is no guarantee that companies, especially in big cities with public transportation, will race back to the office. Plus, firms that find the remote environment relativity seamless might cut back on rent and commercial real estate expenses. And Zoom was already growing before the pandemic.
Zoom on June 2 crushed our Q1 earnings estimate by 100%, while its revenue skyrocketed 169% to hit $328.2 million, which also destroyed our estimate. ZM closed the first quarter, ended on April 30, with around 265,400 customers with more than 10 employees, up 354% from the year-ago period. Perhaps more importantly, customers contributing more than $100,000 in trailing 12-month revenue climbed 90% to 769.
Moving on, Zoom’s Q2 revenue is projected to climb 241%, with its FY21 sales set to surge 189%. ZM’s adjusted Q2 earnings are projected to soar 462%, with its full-year figure expected to expand by 237%. Zoom shares hit a new high following its Q1 release, but its stock now rests roughly 9% off its highs as investors take home some profits on a stock that’s up nearly 200% in 2020. Zoom is Zacks Rank #1 (Strong Buy) that earns an “A” grade for Momentum and a “B” for Growth, and is part of a highly-ranked Zacks industry.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>