Stocks have surged in November, with all three major U.S. indexes right near new highs. The S&P 500 is now up over 4% in the last month on the back of U.S.-China trade war optimism, better-than-expected earnings, another interest rate cut, and solid U.S. jobs data. With this in mind, tech stocks look strong and cloud-focused companies remain in high-demand.
Cloud computing evolved from a budding innovation into one of the largest factors driving growth in the tech sector in a short period of time. Today, cloud computing is an integral part of the broader tech industry and it has become vital to businesses and many everyday consumers.
The success of e-commerce powerhouse Amazon’s AMZN AWS cloud computing business helped it expand into new growth areas. On top of that, firms such as Salesforce CRM have expanded quickly in the larger cloud-based Software-as-a-Service market that seems to be the future of both business and tech.
So here are three cloud stocks we found utilizing our Zacks Stock Screener that tech investors might want to consider buying amid our strong November…
We start with Amazon’s largest competitor in the cloud space and the trillion-dollar tech powerhouse poised to expand for years to come. Microsoft’s Intelligent Cloud revenue surged 27% last quarter (Q1 fiscal 2020) to blow away our Key Company Metric estimate and top Q4’s 19% expansion. Overall, MSFT’s quarterly revenue jumped 14%, as other divisions, which feature Office, Windows, gaming and more, continue to climb as well.
Microsoft stock has popped over 7% since it posted earnings results on October 23 to rests right near its highs. Overall, MSFT shares have surged 40% in the past 12 months and 75% during a two-year stretch to easily top all of the FAANG stocks—with Apple AAPL and AMZN up 55%. CEO Satya Nadella—who took over in February 2014—helped breathe new life into the historic firm that had seen its stock price move mostly sideways for roughly 15 years.
MSFT’s cloud push, AI initiatives, acquisitions such as LinkedIn, and continued innovations within Office, Windows, and devices have it in rarefied air again. Our current Zacks Consensus Estimates call for Microsoft's full-year fiscal 2020 sales to pop 11.3%, with fiscal 2021 expected to jump another 11%. MSFT’s adjusted full-year earnings are expected to climb 12.6% in both of the next two years, and its longer-term earnings revisions help MSFT earn a Zacks Rank #2 (Buy). Plus, Microsoft returned 28% more to shareholders through dividends and repurchases in Q1 FY20 than in the year-ago period.
Upland Software, Inc. UPLD
Upland Software is microscopic compared to Microsoft, with a market cap of $905 million. But it certainly appears to be worth considering. Upland is a cloud-based enterprise work management software company with seven suites for everything from business automation to project management. UPLD’s clients include the likes of PepsiCo and other large firms, and in early October it acquired “leading customer revenue optimization cloud solution” company Altify, as part of a larger string of acquisitions
Last week, the company fell just shy of our Q3 estimates, which led to a small selloff. Still, revenue surged 48% and adjusted earnings popped 50%. Looking ahead, Upland’s adjusted full-year earnings are projected to surge 48% on the back of 46% revenue expansion. The company’s 2020 sales are then expected to jump 21% higher to lift earnings another 9%. “Our M&A pipeline is robust, we are actively pursuing additional strategic acquisition opportunities, and as our strong Q4 and full year guidance reflects, we are looking forward to a strong end to the year,” CEO Jack McDonald said on the company’s November 7 conference call.
UPLD stock is down 14% in the past three months, including its 10% post-earnings drop. Despite the recent downturn, Upland’s shares are up 31% in 2019 and 70% in the last two years. UPLD stock recently slipped below both its 50 and 200-day moving averages, which it doesn’t like to stay below for long. Therefore, now could be a solid time to buy this cloud-focused tech stock on the dip. Upland is currently a Zacks Rank #2 (Buy) that sits in an industry that is in the top 35% of our more than 250 Zacks industries.
Five9, Inc. FIVN
Like its peers, Five9 holds a Zacks Rank #2 (Buy) at the moment based on its positive earnings revision trends, along with an “A” grade for Growth in our Style Scores system. Five9 is a cloud-based SaaS solutions firm for call and contact centers that hopes to remove the “hassle and expense of traditional on-premise” operations. The firm allows its business clients to offer consumers help via, phone, chat, email, video, social media, and more.
The San Ramon, California-based company also provides its customers the opportunity for real-time reporting data, recording, and other valuable analytics. Five9, which boasts clients such as Teladoc, Lululemon, and DoorDash, beat our top and bottom-line projections in early November. The company’s Q3 sales jumped 28%, driven by enterprise-level growth. Management noted that it hired more engineers in response to larger enterprises’ demand for cloud contact centers.
Five9 plans to expand internationally going forward and its full-year fiscal 2019 revenue is projected to jump 25%, with 2020 expected to come in 15% higher at $371.5 million. Meanwhile, its adjusted FY19 EPS figure is expected to jump over 28%, with 2020 projected to surge 12% above our current-year estimate. FIVN stock is up 14% in the past month, 55% in the last 52 weeks, and 150% over the last two years.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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