3 Buy-Rated Cloud Stocks to Scoop Up in February

3 Buy-Rated Cloud Stocks to Scoop Up in February

Posted On February 18, 2021 12:44 am

The cloud computing industry has been one of the biggest beneficiaries of the COVID-19 pandemic, given increased demand for services to facilitate remote working and learning. While mass vaccine deployment and reduced restrictions on social distancing are expected to drive economic recovery this year, the corporate world is expected to retain the remote working culture it adopted last year.

Most organizations and tech giants have announced plans to develop a hybrid work model, allowing employees to work from home partially or permanently in the future. In light of these developments, the global cloud computing market is expected to grow at a CAGR of 17.5% over the next five years, to reach $832.10 billion by 2025.

Cloud computing giants Adobe, Inc. (ADBE – Get Rating), ServiceNow (NOW – Get Rating), and VMware (VMW – Get Rating) have capitalized on the new trend in an effort to solidify their foothold in the market. These companies have taken several steps to expand their market reach and therefore are expected to generate significant revenues and earnings in the near term.

Adobe Inc. (ADBE – Get Rating)

Founded in 1982, ADBE is a software company that enables its users to design and deliver exceptional digital experiences. The company operates primarily through three segments – Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers its flagship product Creative Cloud, which is a subscription service that allows users to download and access the latest versions of its creative products. ADBE’s products include Adobe Creative Cloud, Adobe Document Cloud, and Adobe Experience Cloud.

The company announced this month that it has collaborated with Zoom Video Communications, Inc. (ZM) to make remote working easier with the availability of Zoom plugin for Adobe XD. Users  can now quickly join or start Zoom meetings directly from XD. A new feature called “invite to edit” was introduced in ADBE’s Photoshop, Illustrator and Fresco on the same day. It allows collaborators to edit a shared cloud document, one at a time.

ADBE acquired Workfront on December 7, 2020.  With the acquisition,  ADBE hopes to improve on remote work collaboration. Workfront is equipped with APIs that enable a seamless connection to Adobe Creative Cloud and Adobe Experience Cloud, which have become the global standards for creative workflows and customer experience management.

ADBE’s total revenue increased 14.4% year-over-year to $3.42 billion for the fiscal 2020 fourth quarter ended November 27, 2020. The company’s revenue from the digital media segment increased 20% year-over-year to $2.50 billion. Its  net income was reported at $2.25 billion, up 164.1% year-over-year. Its non-GAAP EPS increased 22.7% year-over-year to $2.81.

A consensus EPS estimate of $2.78 for the quarter ending February 28, 2021, represents a 22.5% improvement year-over-year. Moreover, ADBE surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $3.76 billion for the quarter ending February 28, 2021 represents a 21.6% rise from the same period last year.

ADBE has gained 32.1% over the past year and closed yesterday’s trading session at $501.64.

ADBE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

ADBE has an A grade  for Quality and B for Momentum and Stability. We have also graded ADBE for Growth, Value and Sentiment. Click here to access all ADBE’s ratings.

ADBE is ranked #21 of 107 stocks in the Software – Application industry.

ServiceNow (NOW – Get Rating)

Founded in 2004, NOW is a provider of enterprise cloud computing solutions that define, structure, manage and automate services for global enterprises. The company’s nearly 6,900 global enterprise customers include nearly 80% of the Fortune 500 companies which rely on the company’s ‘Now Platform’—an intelligent and intuitive cloud platform—for successful digital transformation. NHS Scotland is also using the ‘Now Platform’ to integrate and digitize its  COVID-19 vaccine administration process.

NOW signed an agreement in November to acquire…

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