|Bid||0.00 x 900|
|Ask||0.00 x 800|
|Day's Range||59.86 - 60.09|
|52 Week Range||45.36 - 61.37|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||24.73%|
|Beta (3Y Monthly)||0.98|
|Expense Ratio (net)||0.60%|
Cloud-based enterprise stocks led the software sector lower during a broader selloff Monday, as businesses wait for signs of more economic certainty before parting with their IT bucks.
Hundreds of new ETFs have come to market this year with the Global X Cloud Computing ETF (CLOU) easily ranking among the standouts. CLOU, which debuted in April, follows the Indxx Global Cloud Computing Index, the fund holds a basket of companies that potentially stand to benefit from the continuing proliferation of cloud computing technology and services. The cloud computing industry refers to companies that (i) license and deliver software over the internet on a subscription basis (SaaS), (ii) provide a platform for creating software applications which are delivered over the internet (PaaS), (iii) provide virtualized computing infrastructure over the internet (IaaS), (iv) own and manage facilities customers use to store data and servers, including data center Real Estate Investment Trusts (REITs), and/or (v) manufacture or distribution infrastructure and/or hardware components used in cloud and edge computing activities.
Three cloud computing exchange traded funds that is. The latest entrant to the cloud ETF fray tracks the BVP Nasdaq Emerging Cloud Index, which is equally weighted Index designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers,” according to WisdomTree.
Shares of Workday (NASDAQ:WDAY) fell about 6% in late August after the hyper-growth cloud enterprise resource planning company reported second-quarter numbers which topped expectations. Management also hiked the full-year 2020 revenue guide. In other words, Workday reported a double-beat and-raise second-quarter earnings report, and in response, WDAY stock fell.Source: Sundry Photography / Shutterstock.com A stock failing to rally on a double-beat-and-raise report should raise red flags. It is almost always a sign of overvaluation.Is that what we have with Workday stock? I think so. Workday is a great company doing great things. The financials look really good, the narrative is robust, and the long-term potential is promising. But, Workday stock is priced for all that good stuff -- and then some.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIndeed, my numbers indicate that a fundamentally supported fiscal 2020 price target for WDAY stock is somewhere around $140. WDAY stock trades hands north of $170 today -- and we are only halfway through fiscal 2020.Thus, Workday stock seems overextended here. To be sure, overextended stocks can stay in rally mode so long as investors keep buying. But, investors aren't buying anymore. WDAY stock is down 20% over the past two months.I think this is the beginning of a bigger downturn in WDAY stock. As such, I'd avoid buying the dip here for the foreseeable future. Workday Has Solid FundamentalsFirst, I want it to be understood broadly that Workday is a good company doing really innovative things and gaining share rapidly in a big market. There is nothing fundamentally wrong with Workday.Enterprises everywhere are migrating to the cloud. As they do, they are adopting cloud ERP solutions to digitize, automate and optimize finance, HR and corporate planning processes. SAP (NYSE:SAP) and Oracle (NYSE:ORCL) have traditionally dominated the ERP market. But as the market has pivoted to the cloud, Workday has stepped in as a third legitimate player. A few years ago, hardly anyone used Workday. Today, 50% of Fortune 50 companies and 40% of Fortune 500 companies use Workday for their cloud ERP. * 7 Best Tech Stocks to Buy Right Now There's still plenty of room for growth here. Only one-fifth of enterprise workloads have migrated to the cloud so far. Further, while 40% of Fortune 500 companies use Workday, only 17% of global 2000 companies do so, too. Thus, Workday has a tremendous opportunity over the next few years to: 1) grow wallet share among big enterprises, and 2) increase adoption among smaller enterprises on a global scale.Consequently, revenue growth will remain big for the foreseeable future. Most of that revenue growth will come through the high-margin subscription revenue pipeline, so it will be additive to gross profits. At the same time, big revenue growth should drive consistent positive operating leverage, so operating margins and profits should both move higher with revenues.Net net, Workday projects to be a big revenue and profit grower for a lot longer. Workday Stock Is OvervaluedSound like a great growth narrative? It is.But, WDAY stock is already priced for all this. Revenue growth is slowing from 30%-plus rates, to 20%-plus rates. The margin expansion trajectory is flattening out because Workday is having to spend big to compete at scale. Gross margins in the subscription business are also showing signs of being maxed out. Thus, while profit growth will remain robust, it won't be as robust as it has been.Realistically, I think this a 20% revenue growth company with healthy, but not huge, margin upside drivers. That combination leads me to believe that $6 in earnings per share is an optimistic but doable target by 2025.That would represent more than 250% growth from 2020's projected EPS. But, that's just not enough growth. If you apply an application software average 34-times forward earnings multiple to that 2025 EPS target of $6, you arrive at a 2024 price target for WDAY stock of over $200. Discounted back by 10% per year, that equates to a 2020 price target of under $140.Workday stock trades north of $170 today. We aren't even halfway through fiscal 2020. Thus, WDAY stock seems aggressively overvalued today. The Party Appears to Be OverTo be sure, aggressively overvalued stocks can stay aggressively overvalued for a long time, so long as investors keep buying into the stock and the party stays alive.Unfortunately, the party in WDAY stock appears to be winding down.Markets have been choppy over the past few months. But not too choppy. Since mid-July, the S&P 500 is down about 3.5%. Cloud stocks are down about the same, with the First Trust Cloud Computing ETF (NASDAQ:SKYY) down about 5%.WDAY stock is down more than 20% over that same stretch. That is a noticeable underperformance of both the market and Workday's peers over the past few weeks.This underperformance leads me to believe that the party is over, meaning that this stock may not find support until its fundamentals give it support -- which doesn't happen until $140. Bottom Line on WDAY StockI'd stay away from Workday stock for the foreseeable future. The party appears to be over, and now the market is left with an aggressively overvalued cloud stock that investors don't want to touch. That dynamic should ultimately result in WDAY stock falling back below $150 over the next few weeks to months.As of this writing, Luke Lango did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post Beware of Valuation Risks on Workday Stock appeared first on InvestorPlace.
New exchange traded funds face plenty of headwinds on the road to success. The Global X’s Cloud Computing ETF (CLOU) is a targeted ETF that, when it debuted in April, wasn't the first cloud computing ETF on the market. CLOU entered a competition long monopolized by First Trust ISE Cloud Computing Index Fund (SKYY) .
Comprised of stocks focused on software and services, communications and electronic equipment, semiconductors and more, the information technology sector underwent important changes in recent months. For investors looking to capture some of the momentum of the information technology sector, a great way to gain broad exposure is through a focused exchange-traded fund (ETF). ETFs centering on the information technology sector in 2018 faced many of the same struggles as funds focused on other industries and sectors, too.
Salesforce.com agreed to buy big data firm Tableau Software for $15.3 billion in an all-stock deal. This has put the spotlight on ETFs having large exposure to Salesforce.
There are some ETFs that are clearly investor and trader's favorites. When it comes to tech ETFs, the Technology Select Sector SPDR Fund (NYSEARCA:XLK) is the runaway leader. The XLK covers all the major tech stocks in the S&P 500 and includes plenty of top hardware, software, semiconductors and services muscle. Add in its low expense ratio as well as its nearly 4 million shares per day trading volume and it's easy to see why investors have put more than $20 billion in the ETF.However, as awesome as the XLK is as a core tech fund, it isn't the only fish in the sea. There are plenty of other tech ETFs out there.And in many cases, these specialized ETFs may offer something better than the popular XLK. Investors just gravitating to the XLK may actually be doing themselves a disservice. Thinking outside the box could lead to better returns.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Buy for Over 20% Upside Potential But what other tech ETFs are worthy of your time? Here are five that could give the popular XLK a run for its money. Invesco S&P SmallCap Information Technology ETF (PSCT)Source: Shutterstock Perhaps one of the biggest hits against the XLK is that it's full of the big boys -- the Microsofts (NASDAQ:MSFT), the Alphabets (NASDAQ:GOOG), etc. There's nothing wrong with these stocks, it's just many of the current and future leaders in tech are actually much smaller. And in this case, if you're looking for pure growth, then small-cap tech stocks should be where you focus your attention.And that's why the Invesco S&P SmallCap Information Technology ETF (NYSEARCA:PSCT) should be on your list.PSCT is just like the XLK, only this time it tracks all the tech stocks in the small-cap focused S&P 600. This currently includes 88 different stocks. Top holdings include networking equipment maker Viavi Solutions (NASDAQ:VIAV) and cloud computing communications firm 8×8 Inc (NASDAQ:EGHT). The makeup of the ETF a bit different as well -- with electronic components and semiconductors making up the top sector weightings.That makeup and focus on smaller tech stocks haven't hurt the ETF on the performance front. PSCT has managed to post an average annual return of 15.45% over the last five years. That beats the broader S&P 600 and comes close to the XLK's performance.All in all, with more than $300 million in assets and a low 0.29% -- or $29 per $10,000 invested -- expense ratio, the PSCT is one of the best tech ETFs outside the XLK. ARK Innovation ETF (ARKK)Source: Shutterstock Active management works and can beat indexing when a) fund managers keep their funds small and b) when they take concentrated bets in only a handful of stocks. And that's just what Catherine Wood and her team do at the ARK Innovation ETF (NYSEArca:ARKK).ARK looks for stocks conducting so-called "disruptive innovation". Basically, any new technology that potentially changes the way the world works. The firm focuses its attention on four core areas -- the genomic revolution, industrial innovation, the next generation internet and fintech innovation. From here, Wood will select the best ideas and run a pretty concentrated portfolio usually just 35 to 55 stocks. And she tends to sticks to her guns. For example, Wood has been buying tons of Tesla (NASDAQ:TSLA) during its latest meltdown.Say what you will about Wood and her views on TSLA. But the concentrated strategy has worked for ARKK. Over the last 3 years, ARKK has managed to post a whopping 36.70% average annual return. That smashes the XLK over that time by a wide margin. * 5 Data Center REITs to Buy That Deliver Sizable Income Perhaps the only downfall for ARKK is that its rather expensive at 0.75% in annual costs. However, if Wood can keep up the gains, that's a small price to pay to own one of the best performing tech ETFs out there. iShares Exponential Technologies ETF (XT)Source: Shutterstock If you like the idea of innovation and transformative tech, but don't think an active manager can make the right calls, then the iShares Exponential Technologies ETF (NYSEArca:XT). XT uses an index approach to get the job done.XT tracks the Morningstar Exponential Technologies Index. Exponential technologies are defined as advances which "displace older technologies, create new markets and have the potential to create significant positive economic benefits." This includes everything from 3-D printing and robotics to genomics/personalized medicine and data mining.The beauty is that XT doesn't just track strictly tech stocks like the XLK. It looks at all sectors to find these disruptors. There's plenty of industrials, healthcare and even real estate firms in the ETF. The fund currently 200 different global stocks -- with top holdings including ServiceNow (NYSE:NOW), Align (NASDAQ:ALGN) and First Solar (NASAQ:FSLR).Performance wise, XT has been great. Through the end of April, the ETF has managed to produce an 18.70% annual return over the last three years. That's not too shabby. Even better is that XT has been less volatile than some other tech ETFs including the XLK. This is due to it not focusing purely on tech.Either way, with expenses clocking at 0.47%, XT makes a great choice for those investors looking to add some tech ETFs to their portfolios. First Trust ISE Cloud Computing Index Fund (SKYY)Source: Shutterstock Perhaps one of the biggest and most immediate advances in the tech sector has to be cloud computing. Every time you've used an app on your phone or accessed a data center at work, you've used the power of the cloud. More and more, our information and programs are being stored off-site. Software as a Service (SaaS) has become big business. That's why the First Trust ISE Cloud Computing Index Fund (NYSEARCA:SKYY) could be one of the best tech ETFs to buy.SKYY tracks the ISE Cloud Computing Index. The underlying index looks for firms that provide network hardware/software, storage, cloud computing services or those firms that deliver goods and services that utilize cloud computing technology. Preference is placed on those stocks that are pure cloud computing plays with tech conglomerates or those firms only derive a portion of their revenues from the cloud receiving a smaller weighting.The ETF is fairly concentrated at just 28 holdings. Top stocks include Salesforce.com (NYSE:CRM), SAP (NYSE:SAP) and VMware (NYSE:VMW).That explosive nature of cloud computing has helped propel SKYY one of the best performing tech ETFs around. Over the last three years, the fund has produced a 28% annual return. That's more than double the S&P 500. * 5 ETFs to Buy for the Future of Technology Expenses for SKYY clock in at just 0.60%. The KraneShares CSI China Internet ETF (KWEB)Source: Shutterstock Silicon Valley isn't the only place where tech innovation is happening. In fact, China has just as many global tech stock giants as the U.S. In looking for alternative ETFs to the XLK, heading to the Dragon Economy could be a smart bet and the KraneShares CSI China Internet ETF (NYSEArca:KWEB) could be the way to access the opportunity.KWEB tracks an index of China-based companies whose primary business are in internet-related sectors. The ETFs holdings read like a who's who of internet retailers, social media, gaming, travel and commerce sites in the nation. This includes giants like Alibaba (NYSE:BABA), NetEase (NASDAQ:NTES) and JD.com (NYSE:JD). With the ETF, you're basically getting the Facebook's (NYSE:FB) and Amazon's (NASDAQ:AMZN) of China.Given the sheer size of China's population and the growth of the internet in the nation, KWEB could be a solid long term bet for investors looking to expand their tech holdings. However, don't expect a smooth ride. The fund has been pretty volatile -- especially these days as the trade war has persisted. But the longer term looks rosy for China and its growth.With nearly $1.8 billion in assets and a 0.70% expense ratio, KWEB is the prime way to get a piece of the action.Disclosure: At the time of writing Aaron Levitt was long AMZN and XT. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Over 20% Upside Potential * 5 Large-Cap Stocks Holding Steady Amid Trade War Concerns * 7 ETFs for Healthy Healthcare REITs Compare Brokers The post 5 Great Tech ETFs That Aren't the XLK appeared first on InvestorPlace.
Tech companies are at maximum risk in the trade war. Naturally, all tech ETFs witness a bloodbath on May 13, among which, the following funds lost the least.
When investing in volatile markets, investors should focus on stocks with strong growth stories that have been "unfairly punished by short-term market noise," Mark Tepper, president at Strategic Wealth Partners, told CNBC, particularly highlighting the cloud computing and software segment as a service in this environment. "If you stick with companies whose growth stories are less impacted by market noise, you're going to do well," Tepper added. For example, Tepper underscored the opportunity in companies like Microsoft (MSFT) that are expanding into cloud computing.
Many new exchange traded funds struggle to attract assets immediately following their debuts. This is especially true of niche ETFs and those funds entering a market segment occupied by an established ...
[Editor's note: This story was previously published in February 2019. It has since been updated and republished.]Cloud stocks are back. During the late 2018 market selloff, cloud stocks were thrown out, along with every other growth stock in the market. But as financial markets have improved in early 2019 due to stabilizing economic fundamentals, cloud stocks have come roaring back.The big rebound in cloud stocks can be chalked up to improving fundamentals and sentiment. As it turns out, the global economy isn't spiraling downward at a rapid rate. Instead, it is simply slowing at a reasonable rate to a more steady 2-3% growth rate. Amid this slowdown, cloud services demand has remained robust, since cloud services are seen both as the future and a way to cut costs amid slowing growth.InvestorPlace - Stock Market News, Stock Advice & Trading TipsConsequently, the fundamentals and sentiment underlying cloud stocks have dramatically improved over the past month. As they have, cloud stocks have soared higher. * 7 Dividend Stocks That Could Double Over the Next Five Years This rally is far from over. Considering only 20% of enterprise workloads have shifted to the cloud, it's fair to say that the rally in cloud stocks is still in its early stages. With that in mind, let's take a look a seven cloud stocks to buy now. Adobe (ADBE)Perhaps the best-in-class cloud stock to buy now for healthy upside and limited risk is Adobe (NASDAQ:ADBE).The core growth narrative here is quite promising. Adobe is one part stable-growth business with a huge moat, and one part hyper-growth business with a rapidly expanding addressable market. Those two parts put together are worth far more than what the market is saying today.On the stable growth side, Adobe is a one-stop shop digital solution for creative professionals with relatively muted competition. This has always been the case. If you can't think of any true competitors to Adobe in the creative solutions space, you aren't alone. Just check out this list or this list of Adobe Photoshop alternatives. None of them are household names. Nor do any of them offer products even close in quality to Adobe's offerings. As such, this creative solutions business is a stable growth business with a huge moat and no competition, implying healthy revenue and profit growth for the foreseeable future.On the hyper growth side, Adobe is morphing into a cloud business with a unique value prop. Other cloud solutions focus on various factors. Adobe's cloud solutions focuses on experiences and visuals, and the company is leveraging its experience in visual-oriented solutions to create cloud solutions for companies looking to enhance their consumer's experience. As it does, Adobe's revenue and profits will move considerably higher.Overall, there's a lot to like about ADBE stock. This is a big growth company that will keep growing at a big rate for a lot longer. That level of robust growth will power ADBE stock significantly higher in a long term window. Twilio (TWLO)Another best-in-class cloud stock is cloud communications app maker Twilio (NYSE:TWLO)Over the past several quarters, Twilio has emerged as the unchallenged leader in the rapidly growing Communication Platforms-as-a-Service (CPaaS) market. The CPaaS market essentially consists of companies integrating real-time communication into their services. Think of Uber or Lyft using messages to communicate with riders when their rides are approaching.This market will be huge due to continuous shifts towards cloud-based communication, personalized customer experience and digital engagement. Quite simply, as consumers, we enjoy digital, real-time, and personalized communication about the services and products we are paying for. Twilio enables this communication. That positions this company for huge growth as the CPaaS market expands over the next several years. For what it's worth, research firm IDC expects this market to grow five fold over the next five years.Thanks to its huge customer and revenue growth and 95%-plus retention rate, Twilio has emerged as the clear leader in this space. As this space matures over the next several years, companies will increasingly turn towards Twilio to enable CPaaS solutions thanks to the company's leadership position (in new industries, you always tend to trust the leader). * 7 Dividend Stocks That Could Double Over the Next Five Years As such, over the next several years, Twilio will continue to grow at a rather robust rate. This big growth will ultimately power TWLO stock higher, especially against a favorable equity backdrop. ServiceNow (NOW)In the digitization and automation fields, the cloud stock to buy is ServiceNow (NYSE:NOW).ServiceNow is currently in the business of digitizing corporate operations. This includes automating corporate workflows and IT tasks. But, this is just the tip of the iceberg for ServiceNow. Automation is a big, big market. Automating IT tasks represents just a fraction of what the automation market will look like at scale.At scale, jobs across the entire corporate ecosystem will be replaced by more efficient digitized and automated solutions. ServiceNow will provide the lion's share of these solutions. As such, as the automation revolution plays out over the next several years, ServiceNow's revenues and profits will explode higher. As they do, NOW stock will explode higher, too, considering the valuation today remains reasonable.Overall, NOW stock is a great way to play the automation revolution. This revolution is still in the first inning, and the next eight innings promise to have broad and immense financial implications. For ServiceNow, those implications are hugely positive. As such, NOW stock should trend consistently higher over the next several years. Okta (OKTA)One of the more exciting cloud stocks to consider here is Okta (NASDAQ:OKTA).Okta is pioneering what the company calls the identity cloud. Essentially, this is a cloud solution centered on individual identity that allows millions of people across a corporate ecosystem to seamlessly, securely, and uniformly connect to the technological tools that the corporation is adopting. This may sound like a complex idea. The underlying technology is complex. But, the idea isn't. The idea is that companies everywhere are rapidly adopting new technologies, and that the implementation of these technologies is often difficult, chunky, and risky to identities and data. Okta solves this problem, and allows companies to adopt new technologies seamlessly and within the same secure cloud solution.This is a big idea. Big ideas have big markets. Indeed, the addressable market for Okta's identity cloud is the whole IT space. Okta recorded revenues of $115 million last quarter from growth of nearly 60%. This is nothing new. Over the past several quarters, the average revenue growth rate has hovered around 60%. * 7 Dividend Stocks That Could Double Over the Next Five Years Thus, this is a small company that is consistently and rapidly growing in a huge market. Gross margins are high, and marching higher, leaving room for big profits at scale. Overall, this is a big growth company with a ton of potential. The valuation is big, but the amount of growth firepower underneath this business implies a tremendous opportunity to grow into the valuation, and then some, making OKTA stock an attractive long term investment here. Salesforce (CRM)The king of all cloud stocks is Salesforce (NYSE:CRM), and there's good reason for that.Salesforce is at the heart of the cloud and data revolutions. The company leverages data and analytics to deliver robust cloud solutions to enterprises that want data-driven insights. Demand for this type of service will grow by leaps and bounds over the next several years as data-driven strategies and cloud solutions become the enterprise norm. Salesforce has developed a long-standing reputation for being the best in class for delivering these services.That won't change any time soon. As such, Salesforce's revenues and profits will soar higher over the next several years as the cloud and data revolutions gain mainstream traction.This will naturally push CRM stock higher. Valuation is somewhat of a concern at nearly 60x forward earnings. But, the company has enough growth firepower through cloud and data tailwinds to grow into its valuation. Plus, valuation has been a long-running concern for this stock, and the stock has done nothing but defy those concerns and head higher over the past several years.The same will be true over the next several years, too. Cloud and data tailwinds will propel CRM stock higher, and this stock will ultimately grow into its valuation. Indeed, numbers indicate the stock could double in the long run. Amazon (AMZN)Amazon (NASDAQ:AMZN) is better known for its giant e-commerce business. But, the true profit growth driver behind Amazon is the company's cloud business -- Amazon Web Services.AWS is the world's largest cloud infrastructure services business, and it's not even close. Amazon Web Services is bigger than its four closest competitors … combined. And the company has consistently controlled more than 30% of the cloud services market.This dominance speaks volumes about just how good AWS is. Indeed, AWS is so good that even Amazon's commerce competitors are giving money to the company through AWS. Notably, Amazon's e-commerce competitor Zulily migrated its infrastructure to AWS recently. Also, AWS is so good that Amazon it is the clear front-runner to win a $10 billion Joint Enterprise Defense Infrastructure (JEDI) commercial cloud contract with the U.S. government. If Amazon were to win that contract, that would be the second huge government contract it has won this decade (AWS won a $600 million CIA contract in 2013). * 7 Dividend Stocks That Could Double Over the Next Five Years Overall, AWS is the clear leader in the cloud infrastructure services. As this market grows over the next several years, AWS will grow, too, and that will provide a big boost to Amazon's profits. A big boost to Amazon's profits will give AMZN stock firepower to head higher. Alphabet (GOOGL)Much like Amazon, Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) is better known for its non-cloud businesses.But, a significantly underappreciated and underrated aspect of Alphabet is Google Cloud. Google Cloud is a big growth, big margin business for Alphabet. To be sure, the business has lost some steam over the past several quarters as Microsoft (NASDAQ:MSFT) has gained cloud market share at a more robust pace than Alphabet recently. But, there have been some C-suite changes at Google Cloud which could give the business new direction and new firepower to regain some lost momentum.Regardless, Google Cloud will remain a 20%-plus growth business for a lot longer. Overall, Google Cloud is the key to unlocking the next leg of value in GOOGL stock. Fortunately, this business is progressing as expected, and will continue to do so over the next several years. As it does, GOOG stock will move higher.As of this writing, Luke Lango was long ADBE, TWLO, CRM, AMZN and GOOG. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dividend Stocks That Could Double Over the Next Five Years * 6 S&P 500 Stocks Ready to Break Out * 5 Mining ETFs to Dig Into Compare Brokers The post 7 Cloud Stocks to Buy Now appeared first on InvestorPlace.