Cloud computing evolved from a budding innovation in tech into one of the largest factors driving growth in the technology sector in a relatively short period of time. Today, cloud computing is an integral part of the broader tech industry and it has become vital to businesses big and small and integral to many everyday consumers.
The success of e-commerce powerhouse Amazon’s AMZN AWS cloud computing business helped the company expanded into other growth areas and propel Jeff Bezos’ firm to new heights. Meanwhile, Microsoft MSFT shares have crushed Apple AAPL over the last three years as it successfully expands its cloud reach. On top of that, firms such as Salesforce CRM have expanded quickly in the larger cloud-based Software-as-a-Service market that seems to be the future of business.
With this in mind, check out these three cloud-focused SaaS stocks we found using our Zacks Stock Screener for tech investors to consider buying in the fourth quarter of 2019…
Five9, Inc. FIVN
Five9 is a cloud-based SaaS solutions firm for call and contact centers that hopes to remove the “hassle and expense of traditional on-premise” operations. The firm allows its business clients to offer consumer help via, phone, chat, email, video, social media, and more. The San Ramon, California-based company also provides its customers the opportunity for real-time reporting data, recording, and other valuable analytics. Five9, which boasts clients such as Teladoc, Lululemon LULU, Fitbit FIT, and DoorDash, has seen its shares surge 35% in the past 12 months and 108% over the last two years, to blow away its industry’s 11% average and the S&P 500’s 15%.
FIVN shares have cooled off since hitting new highs in August. Yet, the recent downturn has pushed Five9 stock 20% below its recent highs, which could give the stock some room to run. Our Zacks Consensus Estimates call for the company’s Q3 revenue to jump over 20%. Looking ahead, Five9’s adjusted fiscal 2019 earnings are projected to pop 18.3% on 21.4% stronger sales. Meanwhile, full-year 2020’s EPS figure is once again set to jump 18.3% higher on over 18% revenue expansion. Five9 is a Zacks Rank #1 (Strong Buy) at the moment that rocks a “B” grade for Growth in our Style Scores system and has crushed our earnings estimate by an average of 64% over the trailing four periods.
AppFolio, Inc. APPF
AppFolio is a tech company that sells a suite of cloud-based software and services designed for small the mid-sized companies. The Santa Barbara, California-headquartered firm has multiple levels of offerings made to streamline workflows and increase output for real estate management clients from commercial to residential and everything in between. Along with its Property Manager offerings, AppFolio sells MyCase, which helps legal professionals manage cases. Shares of APPF, which was founded in 2006, have surged 60% in 2019 to crush its industry’s 13% climb. Going back further, AppFolio stock has skyrocketed from around $20 per share in October 2016 to its current price of roughly $96.
Despite AppFolio’s strong run, its shares have cooled off recently, down 11% in the last three months. This helps APPF stock hover 13% below its 52-week highs, which might give the stock room to climb in the fourth quarter. AppFolio’s Q3 revenue is projected to jump 34% from the year-ago period, with full-year fiscal 2019 also projected to surge 34% and hit $254.68 million. The company’s adjusted FY19 earnings are projected to pop 19% to $0.88 per share. APPF is a Zacks Rank #2 (Buy) at the moment that holds an “A” grade for Growth and crushed our Q2 earnings estimate by nearly 500% ($0.65 vs. $0.11).
Upland Software, Inc. UPLD
Upland Software is a cloud-based enterprise work management software firm with seven suites for everything from business automation to customer engagement. The firm’s clients include the likes of PepsiCo PEP and Johnson Controls, Inc. JCI. The company also on October 7 purchased Altify, which it calls “the leading customer revenue optimization cloud solution for sales and the extended revenue teams.” Upland executives expect the deal will add $24 million in annualized revenues and are very positive about the ability to integrate the offerings into a more robust solution. UPLD upped its full-year fiscal 2019 guidance when it announced the deal.
Like its peers on this list, Upland Software stock has fallen recently, down 19% in the last three months. The downturn might present investors a chance to buy UPLD shares on the dip as they rest 30% off their 52-week highs at the moment. Plus, Upland Software stock has already skyrocketed from under $9 per share three years ago as the SaaS and cloud market becomes more attractive to businesses. UPLD stock is a Zacks Rank #1 (Strong Buy) and is projected to see its adjusted full-year earnings soar 46.5% on the back of 47% revenue expansion that would see it pull in $219.50 million. This year’s projected Altify-aided boost is projected to be followed by over 11% sales growth in 2020 and the firm has a strong history of quarterly earnings beats.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Five9, Inc. (FIVN) : Free Stock Analysis Report
AppFolio, Inc. (APPF) : Free Stock Analysis Report
Upland Software, Inc. (UPLD) : Free Stock Analysis Report
Johnson Controls International plc (JCI) : Free Stock Analysis Report
Pepsico, Inc. (PEP) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
salesforce.com, inc. (CRM) : Free Stock Analysis Report
Fitbit, Inc. (FIT) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research