Cloud stocks have underperformed the rest of the market during this rally, but why? The outlook for these businesses remain strong, and revenues are growing at a brisk pace. The market might not be giving these cloud stocks enough credit.
Capital expenditures have been down, thanks largely to trade war uncertainties. The lack of spending has been a headwind for cloud stocks in recent months and shareholder returns suffered as a result. However, the long-term outlook for these companies remains relatively unchanged. This pullback could be a buying opportunity for patient, long-term investors
Best Cloud Stocks to Buy on a Dip
Here are four cloud stocks that could be ready to rebound soon.
Salesforce.com, Inc. (CRM)
The shares of the San Francisco-based Salesforce could be ready to rebound following an excellent quarterly earnings report. Salesforce lagged the overall market over the past six months, down roughly 2% during that time. However, it could be ready to recover.
Earlier this week, Salesforce released its third-quarter earnings report. The company beat Wall Street’s earnings expectations with $4.5 billion in revenues, representing YoY growth of 33%. Estimates predicted only $4.45 billion. EPS of $0.75 also topped analyst estimates of $0.66.
The favorable earnings report could be a bullish signal for share prices.
Cisco Systems, Inc. (CSCO)
Cisco’s networking hardware is commonly used by cloud hosts and data centers. However, the company’s stock has suffered in recent months. Share prices fell 25% over the past six months. However, the market is climbing higher and Cisco could be an excellent swing trade candidate.
Cisco and Amazon Web Service have strengthened their partnership in areas such as SD-WAN, data centers, and cloud. Cisco’s Application Centric Infrastructure (ACI) technology would now be available on AWS centers.
Similarly, Cisco’s Viptela-based SD-WAN has been added to AWS Transit Gateway. These recent developments could play a role in helping Cisco’s share price recover from its slump.
Okta Inc. (OKTA)
Okta specializes in cloud-based cybersecurity, but it also had a rough few weeks. Shares are down by 5% over the past week, but the outlook remains strong for this company.
Okta publishes its Q3 earnings results today. Consensus estimates call for revenues of about $143-$144 million, with YoY growth of 35-36% growth year-on-year. Ultimately, Okta is expected to post a net loss of 12 cents per share.
Okta earnings beat consensus forecasts for four consecutive quarters. If they can make it five, share prices could pick up some steam.
Workday Inc. (WDAY)
Shares of Workday plummeted over the past few days, but they could rebound after Monday’s bullish earnings report. Despite the recent slump, the California-based cloud firm had a solid year so far.
On Monday, Workday’s earnings results topped Wall Street’s expectations and raised its full-year forecast. Subscription services revenue, an important component of Workday’s sales, grew by 28% during the last quarter. Revenues came in $798.5 million and topped the $785 analyst forecast.
Workday expects to generate between $828 million and $830 million in subscription revenues in the current quarter, so it raised its full-year revenue forecast from $3.07 billion to $3.087 billion.
More Cloud Stocks Ready to Rebound
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