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3 Cloud-Focused Tech Stocks to Buy as Market Rallies on Coronavirus Optimism

Benjamin Rains

The Dow, the S&P 500, and Nasdaq all jumped again through early afternoon trading Thursday, as part of a larger two week-plus market rally. The recent positivity comes on the back of signs that social distancing is working in the U.S. and elsewhere to help flatten the coronavirus curve.

Plus, the Fed on Thursday unveiled yet another set of programs in its efforts to provide support to the U.S. economy amid the coronavirus economic downturn, which was highlighted by another 6.6 million people who applied for unemployment benefits last week.  

The S&P 500 is now technically in a new bull market, up over 20% from its March 23 lows, officially joining the Dow, which broke through that range in only a matter of days. These ultra-quick climbs highlight why pulling out of the market completely during downturns and volatility often prevents investors from grabbing some big bounces.

However, volatility could remain because no one really knows when the economy will start to return anywhere close to normal. That said, investors might want to start buying stocks or at least adding to their watchlists.

With this in mind, let’s dive into three cloud-focused tech stocks that look like solid longer-term buys…

Anaplan, Inc. PLAN

Anaplan develops cloud-based, enterprise-level SaaS platforms for everything from finance to supply chains. The goal is to help its more than 1,400 customers worldwide improve their planning and decision-making in real time. The San Francisco-based firm topped our Q4 earnings and revenue estimates at the end of February, with its full-year fiscal 2020 sales up 45% to $348 million.

Looking ahead, our current Zacks estimates call for Anaplan’s revenue to jump over 30% in fiscal 2021 and another 27.5% the next year to reach $577.3 million. The company is projected to post a slightly larger adjusted loss this year. But its adjusted FY22 loss is projected to be cut nearly in half. PLAN has also crushed our bottom-line estimates by an average of 31% in the trailing four quarters.  

Anaplan stock has jumped nearly 30% since March 23 and is up roughly 50% since it went public in October 2018. Despite the recent run and the overall strength, Anaplan shares sat over 40% below their 52-week highs of around $63 at roughly $36 a share on Thursday, which could give the stock plenty more room to climb.  

Anaplan is currently a Zacks Rank #2 (Buy) that is part of any industry that rests in the top 35% of more than 250 Zacks industries that growth-minded investors might want to consider.

CrowdStrike Holdings Inc. CRWD

CrowdStrike is a cybersecurity company that was founded in 2011 for the cloud computing age. CRWD’s multi-tenant, cloud native, artificial intelligence-based security solutions for endpoints and more have attracted thousands of customers to its various SaaS subscription-based cybersecurity offerings. CRWD on March 19 reported a much smaller-than-expected adjusted Q4 loss and saw its total fiscal 2020 revenue skyrocketed 93%.

The company also added 870 net new subscription customers in Q4, to end fiscal 2020 with roughly 5,400 customers. CRWD’s CEO said on its earnings call that it was landing more large customers and detailed why it is well positioned both long-term and for the coronavirus economy. The basic reason is that cyber threats don’t sleep and they might actually increase with more people working remotely.

CRWD’s fiscal 2021 sales are projected to surge over 51% to $730 million, with its adjusted fiscal year loss expected to shrink from -$0.42 to -$0.12 per share. It is then expected to post adjusted positive EPS of +$0.16 a share in FY22. CrowdStrike’s positive earnings revisions activity helps it hold a Zacks Rank #2 (Buy), alongside its “A” grades for Growth and Momentum in our Style Scores system.

Plus, CRWD shares have skyrocketed over 80% since mid-March. Yet, at around $60 per share, CrowdStrike stock still rests 40% below its 52-week highs.

Microsoft MSFT

Microsoft hasn’t needed an introduction in decades, but its expansion into cloud computing turned the historic tech giant into a growth company and stock once again. MSFT shares have jumped 22% since mid-March, but they still sit about 14% off their February highs, despite being up over 35% in the last 12 months. The company did join the likes of Apple AAPL and many others when it warned Wall Street in late February that it is likely to fall short of its quarterly sales guidance for its More Personal Computing segment.

Luckily, MSFT said that its Q3 guidance “remain unchanged” for its other units. This is a good sign since Microsoft’s cloud computing segment has driven its growth recently, with Intelligent Cloud revenue up 27% last quarter. Microsoft’s expanding cloud segment, which competes alongside Amazon AMZN for industry supremacy, is poised to carry the firm going forward.

Microsoft’s adjusted earnings are projected to surge over 17% and 11.5%, respectively in fiscal 2020 and 2021, with revenue set to jump 11.6% and 11%. MSFT is currently a Zacks Rank #3 (Hold) that seems like one of the safer investments during the current market. Microsoft also provides investors with some much-needed income at the moment, with a dividend yield of 1.24% that easily tops the 10-year U.S. treasury’s 0.72%.

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
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