The U.S. and China signed the phase-one trade deal Wednesday and the Dow, S&P 500, and Nasdaq all continue to hit new highs as interest rates and U.S. unemployment remain low. JPMorgan Chase JPM, Morgan Stanley MS, and others also just helped kick off fourth quarter earnings season on a high note.
Overall corporate earnings growth is expected to bounce back this year after what is set to be a slight downturn in 2019. Given the current conditions, stocks could continue to climb in 2020.
Therefore, investors likely want to add a few stocks to their portfolios for 2020. And tech seems like a safe place to allocate some funds with semiconductor sales projected to bounce back. Cloud computing also looks poised to continue its expansion.
With this in mind, we found three cloud computing stocks with the help of our Zacks Stock Screener that investors might want to consider buying for 2020…
CrowdStrike Holdings Inc. CRWD
CrowdStrike is a cybersecurity firm 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. Founded in 2011, CrowdStrike went public in June 2019 and found early success, having jumped to $100 per share by August.
CRWD shares have fallen since then, but are up 25% in January and are currently trading at around $62 a share. The stock is trading at 19X forward 12-month sales estimates, which is high but is far below its August peak. Plus, interested investors should think of CrowdStrike as growth play, given that its subscription revenue soared 98% last quarter (Q3 fiscal 2020). On top of that, the Sunnyvale, California-based firm’s total subscription customers surged 112% to 4,561.
In December, CrowdStrike management raised its Q4 sales guidance and its fiscal 2020 sales are projected to reach $466.9 million, based on our Zacks estimates. The company’s 2021 revenue is then projected to surge 42% higher to over $664 million. CRWD is expected to cut its projected adjusted loss of -$0.52 this year to a -$0.21 loss in 2021 as it expands its business. CrowdStrike is currently a Zacks Rank #2 (Buy) based on its strong upward earnings estimate revision activity.
Veeva Systems Inc. VEEV
Veeva Systems offers cloud-based solutions for the pharmaceutical and life sciences industries. Veeva’s software-as-a-service model helps deliver industry-specific tools for customer relationship management, content management, and many other enterprise applications. Shares of VEEV have soared 230% over the last three years to crush its industry’s 55% average climb.
Despite the run, Veeva stock has slipped 15% in the last six months. This might offer a better buying opportunity as VEEV rests just below its 200-day moving average—where it has rarely stayed for long over the last several years. Veeva’s positive bottom-line estimate revisions help it hold a Zacks Rank #2 (Buy) right now.
Veeva topped our Q3 2020 estimates in late November and it holds a “B” grade for Growth in our Style Scores system. Our current estimates call for its full-year fiscal 2020 sales to surge 26.5% to $1.09 billion, which is projected to lift its adjusted earnings by 33% to $2.17. VEEV’s fiscal 2021 revenue is then projected to jump another 27.3% higher to hit $1.39 billion, with its EPS figure set to pop 17% above our current-year estimate.
Alphabet Inc. GOOGL
Google parent Alphabet Inc. doesn’t need an introduction, as its search engine and digital ad businesses fuel its insane 15-plus year run. GOOGL stock has surged 27% in the last six months to crush the S&P 500’s 11% and it hit a new high Thursday. But Alphabet didn’t make today’s list for its ability to dominate digital ad sales, alongside Facebook FB. Instead, investors might want to grab Alphabet because of its efforts to expand its cloud computing reach as it faces further government scrutiny.
Google has a new cloud gaming service called Stadia that could prove to be a hit down the road in the $150 billion global gaming industry. Google also operates a cloud business on both an enterprise and consumer-facing level. The firm continues to invest heavily in order to try to compete alongside industry giants such as Amazon AMZN and Microsoft MSFT.
Alphabet’s Q4 2019 revenue is expected to climb roughly 21%, with fiscal 2020 projected to jump 18.1% above our 2019 estimates. GOOGL’s EPS figures are projected to climb 6.6% and 17.5%, respectively in 2019 and 2020. Google is currently a Zacks Rank #2 (Buy) that is trading right below its industry’s average in terms of forward 12-month sales (6.3 vs. 6.9X).
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