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Looking To Invest In The Cloud? 7 Stocks To Own In 2017

Wayne Duggan

Cloud computing has been one of the major themes in the tech world and on Wall Street in the past couple of years, but is it too late to be investing in the cloud in 2017? According to Pacific Crest analyst Brent Bracelin, there is still plenty of money to be made on the cloud.

In a new report, Bracelin outlined seven top cloud computing stocks for investors to own in 2017.

“After a 10.8 percent sell-off across our coverage list in 4Q16, with six stocks declining by more than 20 percent, we enter 2017 with several high-quality cloud franchises that have compelling growth prospects yet are valued at favorable entry points,” Bracelin explained.

Pacific Crest's 7

Here are Pacific Crest’s seven top cloud stock picks:

  • Adobe Systems Incorporated (NASDAQ: ADBE).
  • Ellie Mae Inc (NYSE: ELLI).
  • HubSpot Inc (NYSE: HUBS).
  • Microsoft Corporation (NASDAQ: MSFT).
  • salesforce.com, inc. (NYSE: CRM).
  • Twilio Inc (NYSE: TWLO).
  • Veeva Systems Inc (NYSE: VEEV).

Bracelin pointed out that public cloud spending is currently around $58 billion per year, but the rate should triple to $205 billion by 2020. He projects SaaS spending alone will grow 20 percent annually to $129 billion by 2020.

Yet, despite the impressive growth numbers, the post-election technology selloff has SaaS stocks trading at just 5.4x FTM EV/S compared to their historical multiple of 7.2x.

Following an upgrade of Twilio to Overweight, Pacific Crest now has Overweight ratings on all seven of the cloud stocks mentioned above.

Latest Ratings for MSFT

Date Firm Action From To
Dec 2016 PiperJaffray Initiates Coverage On Overweight
Nov 2016 Goldman Sachs Upgrades Neutral Buy
Nov 2016 Atlantic Equities Upgrades Underweight Neutral

View More Analyst Ratings for MSFT
View the Latest Analyst Ratings

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