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3 Stocks (Not Named Zoom) to Zoom Your Portfolio Returns in 2021

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Aniruddha Ganguly
·5 min read
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Zoom Video Communications ZM is undoubtedly one of the biggest gainers of the coronavirus-induced lockdowns, shelter at home guidelines and social-distancing trend. The stock has skyrocketed 489.8% on a year-to-date basis.

Demand for this Zacks Rank #3 (Hold) company’s cloud-native unified communications platform, which combines video, audio, phone, screen sharing and chat functionalities, has jumped significantly driven by work-from-home and online learning wave.

Apart from remote workers and online educators, Zoom Video solutions are rapidly getting adopted by telehealth providers. Remote diagnosis is helping them adhere to social-distancing norms without compromising on patient healthcare.

As vaccination programs will take several months to reach a major portion of the global population, social-distancing measures are required to keep the infection rate flat. This will require continuation of work-from-home and online learning, thereby driving Zoom’s top-line growth.

Nevertheless, Zoom’s current momentum will likely be difficult to sustain in 2021 as a sizeable chunk of employees are expected to return to office, per this report from real estate firm JLL, cited by CNBC. Markedly, three in four workers want to join back office when the coronavirus-led health risk subsides. In fact, a hybrid model that includes a couple of days of work from home is likely to be popular among employees.

Although the hybrid model is beneficial for Zoom, intensifying competition from the likes of Microsoft’s MSFT Teams and Cisco’s CSCO Webex is a headwind.

3 Better Bets Than Zoom for 2021

Here we pick three fundamentally strong stocks that offer good investment opportunities compared to Zoom in 2021.

Logitech LOGI is gaining from solid performance by its Gaming and Video Collaboration units. Also, the PC peripheral market is witnessing strong traction, which is aiding top-line growth. Additionally, demand for gaming products has shot up on the growing popularity of online video games and eSports amid the pandemic-led stay-at-home environment.

Further, the thriving cloud-based video conferencing services will continue to be the key catalyst for this Zacks Rank #1 company’s prospects. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, growing adoption of new mobile platforms in both mature and emerging markets is fueling demand for Logitech’s peripherals and accessories. Markedly, the company has manufactured innovative offerings like fastest performing mouse and keyboard switches, wireless mouse with longest battery, and multi-device keyboards, among others.

Additionally, Logitech’s partnerships with the likes of Zoom as well as cloud platform providers like Microsoft and Google are major positives.

The Zacks Consensus Estimate for this $15.27-billion company’s fiscal 2021 earnings has been revised 64.8% upward to $4.12 per share in the past 60 days.
 

Logitech International S.A. Price, Consensus and EPS Surprise

 

Logitech International S.A. Price, Consensus and EPS Surprise
Logitech International S.A. Price, Consensus and EPS Surprise

Logitech International S.A. price-consensus-eps-surprise-chart | Logitech International S.A. Quote

 

Dropbox DBX is riding on growing demand for its team collaboration tools through which users can share files, photos, videos, songs and spreadsheets. This Zacks Rank #2 company’s strong focus on product innovation and introduction of solutions like an updated Dropbox Spaces, HelloSign, Passwords, Vault and Computer Backup are anticipated to expand its user base.

Solid demand for cloud storage, triggered by the coronavirus-led work-from-home wave, has been acting as a tailwind for this $9.73-billion company. Further, integration with leading applications like Zoom, Slack and Atlassian will likely expand the Dropbox paying user base.

Additionally, Dropbox’s innovative “Virtual First” initiative, under which its employees will work from home majority of the time and will meet once in a while for team collaboration, is expected to lower cost. The company’s plan to shift to hiring in low-cost regions is likely to boost profitability.

The Zacks Consensus Estimate for 2020 earnings stands at 88 cents per share, up 12.8% in the past 60 days. The consensus mark for its 2021 earnings is pegged at $1 per share, having been revised 9.9% upward over the same time frame.
 

Dropbox, Inc. Price, Consensus and EPS Surprise

 

Dropbox, Inc. Price, Consensus and EPS Surprise
Dropbox, Inc. Price, Consensus and EPS Surprise

Dropbox, Inc. price-consensus-eps-surprise-chart | Dropbox, Inc. Quote

 

CrowdStrike Holdings CRWD is benefiting from rising demand for cyber-security solutions owing to the slew of data breaches and increasing necessity for security and networking products amid the COVID-19 pandemic-led remote working trend.

Moreover, continued digital transformation and cloud-migration strategies adopted by organizations are key growth drivers for this Zacks Rank #2 company. CrowdStrike’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps in adding users.

Moreover, the company’s next-generation antivirus, EDR and device-control products are well poised to gain amid the thriving remote work culture.

CrowdStrike has a market cap of $39.78 billion. The consensus mark for its 2020 bottom line is pegged at 22 cents per share, up a whopping 266.7% in the past 60 days. For 2021, the consensus mark for earnings has moved 45.5% north to 32 cents per share over the same time frame.

CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise

CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise
CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise

CrowdStrike Holdings Inc. price-consensus-eps-surprise-chart | CrowdStrike Holdings Inc. Quote

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
 
Logitech International S.A. (LOGI) : Free Stock Analysis Report
 
Dropbox, Inc. (DBX) : Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
CrowdStrike Holdings Inc. (CRWD) : Free Stock Analysis Report
 
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