In this article we will take a look at the best video conferencing stocks to buy now. You can skip our detailed analysis of the video conferencing industry and go directly to 5 Best Video Conferencing Stocks to Buy.
Video conferencing services have become essential productivity tools ever since the pandemic-induced lockdowns forced employees to work from home and students to learn from home. Companies scrambled to look for conferencing tools that would help them maintain a productive workforce, thus highlighting the considerable potential for growth in the teleconferencing industry.
The video conferencing market does not seem to be saturated amid an increasing demand. Zoom Video Communications, Inc. (NASDAQ: ZM), for example, experienced a massive surge in demand for its services. Evercore ISI recently named Zoom Video Communications, Inc. (NASDAQ: ZM) in its quarterly enterprise technology spending survey. The survey indicates that IT spending is going to remain strong in the coming months with 80% of the survey respondents saying they expect to see their IT spending rise. According to the survey, some of the most notable companies going to benefit from this IT spending boom are Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), IBM, Zoom Video Communications, Inc. (NASDAQ: ZM) and Oracle.
Some other companies with strong video conferencing tools in the industry include Logitech International S.A. (NASDAQ: LOGI) Cisco Systems Inc (NASDAQ: CSCO), Alphabet Inc Class A (NASDAQ: GOOGL).
The State of the Video Conferencing Industry
Research conducted by Facts And Factors estimates that the global video conferencing market across the world was worth $4.8 billion in 2019. The report forecasts that it will be worth $9.2 billion by 2026, with an 11.45% compound annual growth rate. The enterprise video market was estimated at $14.8 billion in 2020 and is expected to be worth $23 billion by 2027.
Logitech International S.A. (NASDAQ: LOGI), famous for developing PC hardware, has also ventured into the teleconferencing space. However, rather than offering software solutions, the company offers hardware solutions designed to facilitate crisp video conferencing through high-resolution equipment. In the fourth quarter of 2020, Logitech International S.A. (NASDAQ: LOGI) easily beat its EPS estimates. Revenue in the period jumped a whopping 117% to reach $1.54 billion, beating the Street by $400 million. Logitech International S.A. (NASDAQ: LOGI)'s board took several steps to increase shareholder value, including approving an increased share buyback authorization of up to $1 billion. The board also approved a proposal for a fiscal year 2021 dividend. The dividend will be a 10% annual increase compared to the last year’s dividend.
Logitech International S.A. (NASDAQ: LOGI) also raised its FY22 guidance for adjusted operating income.
A glance at stats related to video conferencing tools indicate that there is a huge market for robust and technically strong video conferencing companies. For example, GoToMeeting, an online meeting tool developed by software firm Citrix Systems, Inc. (NASDAQ: CTXS), hosts 18 million users worldwide every month and powers 80 million meetings per year. Florida-based Citrix Systems, Inc. (NASDAQ: CTXS) in 2016 spun off GoTo product line into a new business entity as part of a $1.8 billion deal with LogMeIn. In April, Jefferies upgraded Citrix Systems, Inc. (NASDAQ: CTXS) from Hold to Buy with a $180 price target. The firm’s analyst Brent Thill likes the company’s plan to covert 75% of their limited-use licenses to recurring licenses.
Alphabet Inc Class A (NASDAQ: GOOGL) video communications tool is also thriving, thanks to the rising demand after the pandemic. In April 2020, Alphabet’s CEO Sundar Pichai said that Google Meet was adding a whopping 3 million users per day. Perhaps the biggest edge Alphabet Inc Class A (NASDAQ: GOOGL) has in the video conferencing market is its wide penetration in the education sector. According to an April 2020 announcement, about 120 million students and educators were using G Suite for Education. Google Meet is a core part of G Suite for Education. Alphabet Inc Class A (NASDAQ: GOOGL) Google has added a variety of features to facilitate students and teachers for remote learning, beating its competitors in this specific area.
Cisco Systems Inc (NASDAQ: CSCO)'s Webex is another major video conferencing tool that saw an explosive growth after the pandemic. However, Zoom Video Communications, Inc. (NASDAQ: ZM), which was ironically founded by a former Webex engineer Eric Yuan, is beating Cisco Systems Inc (NASDAQ: CSCO) by wider margins. In December 2020, a survey by Enterprise Technology Research (ETR) showed that over 50% of the questioned companies preferred to use Zoom Video Communications, Inc. (NASDAQ: ZM), while 30% used Cisco’s Webex. Last month, Cisco Systems Inc (NASDAQ: CSCO) gained after Deutsche Bank started covering the stock with a Hold rating. The bank said that Cisco's current stock price reflects it has growth potential.
Wolfe also boosted its price target for Cisco Systems Inc (NASDAQ: CSCO) to Outperform, citing an upbeat IT spending expected in the coming months.
The pandemic not only changed the way we interact, it also shook the financial markets to the core, which is directly affecting the famous money managers. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context and industry outlook in mind, let’s start our list of the 10 best video conferencing stocks to buy.
Best Video Conferencing Stocks to Buy
10. 8x8, Inc. (NYSE: EGHT)
No. of Hedge Fund Holders: 26
8x8, Inc. (NYSE: EGHT) provides integrated cloud services for virtual meetings, chats, voice communications, and contact centers. It recently announced product enhancements to facilitate hybrid work in line with recent research data, which found that 82% of organizations plan to adopt a hybrid work strategy that includes both remote and office work. EGHT ranks 10th in our list of best video conferencing stocks to buy.
Some of 8x8, Inc. (NYSE: EGHT)'s latest offerings include 8x8 Work for Web and 8x8 Communications Platform as a Service (CPaaS) APIs. Apart from boosting the company’s revenue and solidifying its position among the best video conferencing stocks, the new offerings will make it easier for corporates to customize their workflows, third-party applications, and communications.
The solutions will give the company a strategic advantage in the CPaaS market, which is rapidly growing. Analysts estimate that it will be worth $25 billion by 2025. The expansion of 8x8, Inc. (NYSE: EGHT) offerings gives it a strategic position to take advantage of the current growth in the segment.
9. ClearOne Inc. (NASDAQ: CLRO)
No. of Hedge Fund Holders: 3
ClearOne, Inc. (NASDAQ: CLRO) is one of the best video conferencing stocks that might be going unnoticed but is in a position to deliver significant growth. It provides solutions for video and audio communications through its COLLABORATE Space app. ClearOne ranks 9th in our list of best video conferencing stocks to buy.
The app is available on multiple platforms and is advertised as a one-stop-shop through which users can remain connected with friends, family, and even their co-workers. Its free version offers a desktop screen sharing feature and instant messaging. However, ClearOne, Inc. (NASDAQ: CLRO)'s premium version offers tiers of audio and video quality with enterprise-grade solutions.
The company recently launched two new high-quality cameras designed to provide superior quality to what PC and laptop cameras offer, thus enhancing the online collaboration experience for users. ClearOne, Inc. (NASDAQ: CLRO) has been benefiting from the increased demand for such solutions as video conferencing gains popularity.
8. Poly, Owned by Plantronics, Inc. (NYSE: PLT)
No. of Hedge Fund Holders: 16
A good video conferencing experience is not just about the video quality but also the audio quality, and this is the niche that Plantronics, Inc. (NYSE: PLT) is tapping into. Plantronics, Inc. (NYSE: PLT) ranks 8th in the list of the best video conferencing stocks to buy now. It provides a variety of products, including analytics software, desk phones, headsets, audio and video conferencing products that are designed to provide a high level of clarity. PLT ranks 8th in our list of best video conferencing stocks to buy. Like Microsoft (NASDAQ:MSFT), Zoom Video Communications, Inc. (NASDAQ: ZM) and Logitech International S.A. (NASDAQ: LOGI), PLT has strong growth catalysts in the industry.
The company reported record-high sales from its professional audio and video equipment in its fiscal third quarter. One of its latest products is the Poly Studio P Series which is designed to provide the flexibility that professionals need so they can work from anywhere.
7. Avaya Holdings Corp. (NYSE: AVYA)
No. of Hedge Fund Holders: 35
Companies that provide cloud services are also considered among those that will benefit from the increased demand for video conferencing services and Avaya Holdings Corp. (NYSE: AVYA) is one of those companies. It has positioned itself to provide cloud services for contact-center-as-a-service. AVYA ranks 7th in our list of best video conferencing stocks to buy.
Avaya Holdings Corp. (NYSE: AVYA) estimates that its fiscal 2021 revenue will be between $2.9 billion and $2.94 billion and earnings between $3.05 and $3.37 per share.
6. Logitech International S.A. (NASDAQ: LOGI)
No. of Hedge Fund Holders: 21
Logitech International S.A. (NASDAQ: LOGI) ranks 6th in the list of the best video conferencing stocks to buy now.
One of Logitech's latest offerings is Logitech Rally Bar, a video conferencing system that is compatible with Mac and PC devices. One of the highlights of this offering is its cinema-quality camera and an inbuilt microphone that has an impressive range. It is ideal for video conferencing in large rooms, but the company has other solutions such as the Logitech Rally Bar Mini, which is better suited for smaller rooms, and the Logitech RoomMate. Unlike Cisco Systems Inc (NASDAQ: CSCO), Citrix Systems, Inc. (NASDAQ: CTXS) and Alphabet Inc Class A (NASDAQ: GOOGL) which are playing in the tough and competitive market of video conferencing software, Logitech has few competitors.
Logitech International S.A. (NASDAQ: LOGI) reported $1.67 billion in sales in its fiscal Q3, which was 85% higher YoY, while its net income was $423 million. Its quarterly Non-GAAP earnings amounted to $2.45 per share, which was higher than the $1.02 Wall Street estimate.
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Disclosure: None. 10 Best Video Conferencing Stocks to Buy is originally published on Insider Monkey.