The widespread volatility in the stock market has investors taking the side of caution. However, those with a penchant for investment are well aware that such market downturns bring the opportunity of investing in sectors and stocks that are more likely to do better as the sentiments improve. One such sector is cloud computing. One could say that cloud computing is the future, as even today we leverage the technology on a daily basis. From banking to media streaming and even emailing, all involve the cloud in one way or another. Companies across the globe are finding ways to migrate to the cloud as it has become the necessity of the day. Hence, it is only plausible to say, this sector will grow exponentially in the foreseeable future and cloud stocks are a great opportunity for investors.
That being said, it’s the time for Christmas shopping so why not collect some great cloud computing stocks for your Christmas stockings? Therefore, we have compiled a list of the best cloud stocks for you to invest in before Christmas.
The Trade Desk (TTD)
The first stock on our list of cloud stocks is a programmatic ad-buying platform, The Trade Desk (TTD). The Trade Desk empowers buyers of advertising through its self-service, cloud-based platform.
The company has already placed itself as number one in advertising campaign management, surpassing MediaMath and Google Ad Manager. It is also the third-largest demand-side platform by market share. While most ad-buying companies are struggling due to the downturn in the sector, The Trade Desk continues to race higher. It has continuously achieved a 95% customer retention rate for over seven consecutive years.
Despite the gloomy situation in the ad market, the company came out with exceptional results in the latest earnings report, Sales grew 35% year-over-year and the balance sheet remained strong with $1.21 billion in cash plus short-term investments and zero debt. It also managed to grow free cash flow by over 50%. Analysts are expecting revenue growth of 33% this year and 24% to 27% through 2025. Moreover, earnings are forecasted to double from 2022 to 2025.
On top of this, the market opportunity is burgeoning for The Trade Desk. Tired of the dominant closed advertising ecosystems owned by the likes of Meta and Google, marketers are turning away from them. And the shift to advertising on connected-TV platforms is already driving tremendous growth for The Trade Desk.
Therefore, this is not a cloud stock to be missed right now. With its strong profile and standing, The Trade Desk is well-positioned to make tremendous gains in the days to come.
Snowflake Inc. (SNOW)
Up next is a cloud-data warehousing company, Snowflake Inc., with the (SNOW). This cloud computing-based data cloud company offers data storage and analytics services in a game-changing way.
Its signature product, Data Cloud, addresses one of the biggest challenges in cloud computing. Data Cloud enables customers to collect, classify and decipher data across multiple cloud platforms – helping them see all their data in one place. All the top cloud providers, Amazon, Microsoft, and Alphabet are all tightly integrated with Snowflake for the benefit of their customers.
Moreover, Snowflake’s growth is soaring high. It started the year with 241 Fortune 500 companies and 488 Global 2000 companies as its customers. But the company expects the number to grow exponentially with upcoming IT upgrades. Its customer base jumped by 36% in the recent quarter to over 6,800 from one year ago.
Snowflake’s revenue surged 83% year-over-year to $497 million. This comes after a revenue climb of 85% and 101% in the previous quarters. Additionally, Wall Street expects the company to grow its revenue by 70% in this fiscal year and 51% in the next. Whereas, if Snowflake delivers on its expected revenue of $1.915 billion for fiscal 2023, it will have grown its revenue at a compound annual rate of 93% since fiscal 2020.
Another huge plus is the fact that even Warren Buffet’s Berkshire Hathaway owns $1.2 billion worth of the company’s shares. Snowflake stock is undoubtedly a cloud stock in its hyper-growth mode right now and hence the best buy before Christmas.
Salesforce Inc. (CRM)
Next stocks is another leading name in the cloud computing space, Salesforce Inc. (CRM). Salesforce operates the world’s most popular cloud-based customer-relationship-management (CRM) solution. They provide enterprise applications focused on customer services.
According to Salesforce, over 150,000 companies use its software for growing their business. As per the latest software-tracker survey, the company owns a 23.8% share of the global CRM market, which was more significant than the combined share of its top four competitors. To continue growing its market share, Salesforce has shown a penchant for making big acquisitions like Slack Technologies. So far, the company has expanded into marketing, e-commerce, and data analytics.
Since going public in 2004, Salesforce has improved its revenue every year with a compound annual growth rate of over 30%. Continuing the trend, it expanded the July-quarter revenue by 26%. However, while announcing its first-ever repurchase program, Salesforce cut its fiscal 2023 revenue outlook. The company now expects revenue between $30.9 billion and $31.0 billion against the previous $31.7 billion and $31.8 billion. But this shouldn’t be a reason for concern as Salesforce is continuously growing via mergers and acquisitions while also adding new users, products, and services.
Thus, at a price of just 33.1 times forward-looking earnings estimates, this stock is available at a low price for a company with 17% revenue growth in the forecast this year. Moreover, this cloud computing giant’s stock is down nearly 37% year to date, which makes it a great buy right now.
Oracle Corporation (ORCL)
Next is the Oracle Corporation (ORCL). This cloud computing company addresses enterprise information technology environments throughout the world.
Over the past ten years, Oracle has expanded its cloud-based database, infrastructure, enterprise resource planning (ERP), and human capital management (HCM) services exponentially. It has acquired numerous companies to complete the transformation required to offset the slower growth of its on-site database services. The latest in this acquisition spree is the $28 billion purchase of Cerner. Cerner is the second-largest designer of software for the healthcare sector. This takeover is expected to accelerate Oracle’s growth by expanding its reach into the healthcare market.
On the financial front, the company’s latest quarterly revenues were firm at $11.45 billion. The group revenues improved by 18% year-over-year and cloud services sales were very impressive with an increase of 50%. Additionally, cloud infrastructure also marked a nice growth of 58%. However, the bottom line was impacted by the Cerner purchase and the adjusted net income fell by 4% year-over-year. Furthermore, Oracle expects its second-quarter revenue to grow by 21% to 23% in constant currency terms or 15% to 17% as reported.
While the Cerner acquisition inflated the company’s near-term growth rates, its long-term prospects still seem very bright. Oracle pays a forward yield of 1.7% and has plenty of cash to cover its buybacks and dividends. Interestingly, the stock is still quite cheap at 15 times forward earnings. Hence, it is best not to miss out on this cloud computing stock as you go on Christmas shopping for your investment portfolio.
And the final stock on our list is MongoDB (MDB), a New York-based general-purpose database platform provider. The company’s platform can be used to build and modernize applications across a range of use cases in the cloud as well as in on-premise or hybrid environments. Its flagship product is Atlas, which offers a fully hosted, multi-cloud, database-as-a-service solution. Currently, this solution is available on cloud providers in North America, Europe, and the Asia Pacific.
Moreover, MongoDB’s document-based database, NoSQL (not-only SQL) is faster and more efficient than its counterpart. While there are many who provide NoSQL but MongoDB has emerged as the most in-demand database solution worldwide. Amazon’s partnership with the company is proof of its unshakable position in the market. Both companies have a multi-year agreement to offer MongoDB Atlas to Amazon Web Services customers.
The company’s financial profile adds another reason for investing in it as well. As per the latest quarterly results, MongoDB has continued consistent double-digit top-line growth. Revenues were up 53% year-over-year to $303.7 million, while gross profit margin expanded to 71.4% from 69%. While the earnings were a loss of $0.23 per share, the company cleared the bar with ease against the expected $0.28 per share. MongoDB also reported a robust customer growth of 28% year-over-year with direct sales customers swelling by 50%.
Hence, given the continued double-digit growth of the company and a price that is down over 53% year-to-date, MongoDB is also among the best cloud computing stocks to buy before Christmas.