Monday marked the first time since early June that the S&P 500 traded positively year-to-date (YTD).
But it wasn’t able to hold the mid-day rally as stocks reversed course and closed lower to end the trading session.
YTD, the S&P is down 3%.
Meanwhile, the Nasdaq is up 14% – thanks in large part to cloud computing stocks that offer software as a service (SaaS).
Here are my 5 favorite cloud computing SaaS companies to buy now…
5.) Twilio Inc. (NYSE: TWLO)
Shortcode: [finviz ticker=TWLO]
Founded in 2008 and headquartered in San Francisco, Twilio is a cloud communication platform-as-a-service (CPaaS) company that allows software developers to integrate messaging and communications functionality into existing or new applications via application programming interfaces and software development kits.
The firm’s Programmable Communications Cloud addresses several use cases, including Programmable Voice to make and receive phone calls, Programmable Messaging for SMS and MMS delivery, and Programmable Video that allows developers to embed video functionality in mobile and web applications.
With Twilio, software developers can programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs.
And this is becoming increasingly important as the world moves more towards a remote work environment because of the pandemic.
YTD, Twilio is up 118%, outperforming the S&P 500 by 121%. As more businesses reduce or completely cut their office space, look for TWLO to continue outpacing the broad market.
4.) Docusign Inc. (NASDAQ: DOCU)
Shortcode: [finviz ticker=DOCU]
Since its inception in 2003, DocuSign Inc. has been on a mission to speed up business and simplify life for companies and people around the world.
In case you’re unaware, this firm developed some of the first electronic signature technology that helps organizations connect and automate how they prepare, sign, act on, and manage agreements.
Simply put, this company saves other businesses precious time and money. All you need is an Internet connection and an email address…
Instead of mailing a paper document back and forth (which would take days or weeks), DocuSign subscribers can send it to their customers via email to sign electronically in a matter of minutes. And the DocuSign users don’t have to worry about storing the paperwork somewhere safe when they can save the electronic document to the encrypted DocuSign cloud.
Companies that have been reluctant to switch from the “old-fashioned” way were forced to use DocuSign during the lockdown to get business done.
And now investors are betting that the new companies who signed up over the past couple months won’t be switching back after realizing all the time and money they’re saving using DocuSign.
After dropping 23% from $90 to $69 per share during the depths of the pandemic, shares of DOCU started rebounding based on the above analysis.
Since then, the stock has reported year-over-year Q2 revenue increases of 39% and shares have rocketed 177% higher to $191.
That means DOCU has outperformed the S&P 500 by 133% since March and could very well continue higher through the end of the year and into 2021.
3.) Wix.com Ltd. (NASDAQ: WIX)
Shortcode: [finviz ticker=WIX]
Wix.com Ltd is a cloud-based development platform provider for millions of registered users worldwide. Its geographic segments include North America, Europe, Latin America, and Asia and more.
The company is engaged in web development and management that provides an easy-to-use powerful cloud-based platform of products through a “freemium” model.
A combination of the words “free” and “premium,” “freemium” is a pricing strategy by which a product or service is provided free of charge, but money (a premium) is charged for additional features, services, or virtual goods that expand the functionality of the free version of the software.
In Wix’s case, the company provides freemium software that helps individuals create a website for free, but can pay to add additional features.
Its core products consist of three web editors: the Wix Editor, intended for users with basic technological skills, Wix ADI, intended for novice users and Corvid, intended for more tech-savvy users.
The company’s web development technology is built based on HTML5 and offers HTML5 compatible capabilities, web design and layout tools, domain hosting, and other marketing and workflow management applications and services.
YTD, Wix.com stock is up 120% – meaning it has outperformed the S&P 500 by 123%. That’s likely because more people are creating online businesses than ever before due to the global shutdown.
But no matter how quickly things return to normal, there’s always going to be a huge advantage starting an online business with a website rather than a brick and mortar store.
That’s because 4.57 billion people have access to the Internet, while a physical storefront is limited to only the thousands of people who walk by every day.
Because of that simple fact, look for WIX stock to continue its outperformance of the broader market for years to come.
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2.) Zoom Video Communications (NASDAQ: ZM)
Shortcode: [finviz ticker=ZM]
Zoom Video Communications is one of my favorite picks for the second half of 2020 because it carries relatively low risk for a high return potential.
In case you don’t know, Zoom provides a communications platform that connects people through video, voice, chat, and content sharing.
The company’s cloud-native platform enables face-to-face video and connects users across various devices and locations in a single meeting.
Customers can use the platform for teleconferencing, telecommuting, distance education, and social relations.
Zoom’s business strategy focuses on providing an easier to use product than its competitors, as well as cost savings. The company minimizes computational costs at the infrastructure level and has a high degree of employee efficiency.
Zoom, which was founded in 2011 and is headquartered in San Jose, California, serves companies of all sizes from all industries around the world.
You probably already know that ZM stock has been one of the best performing stocks already in 2020 – up 277% so far compared to -3% for the S&P 500. And the best part is, you can still invest today for substantial returns by the end of the year…
Thanks to government shutdowns of “non-essential” businesses, Zoom’s daily active users have increased a whopping 1,900% – from 10 million to 200 between January and March.
But these companies still need to get the same work done, whether they’re allowed to be in the office or not.
And because of its superior technology and cost savings benefits, most are choosing Zoom over all of its competitors (Slack, Microsoft, Cisco, etc.).
The massive increase in daily active users has mostly contributed to Zoom’s meteoric rise.
And I think Zoom’s user growth will continue from here because most states are already pausing plans to reopen their economies in some way, shape, or form.
Even if we discovered a COVID-19 vaccine that could be widely distributed throughout the world tomorrow, many businesses will NOT have their employees return to the office for business as usual.
Instead, they’re going to cut operations costs by reducing office size or eliminating the physical office altogether. And they’re going to continue using Zoom to save money and conduct business remotely.
That’s the “low-risk” element to investing in Zoom today, which I was alluding to earlier.
My prediction is that Zoom will conservatively add another 200 million users by the end of 2020 and continue outperforming the S&P 500 by a wide margin.
1.) Crowdstrike Holdings Inc. (NASDAQ: CRWD)
Shortcode: [finviz ticker=CRWD]
Founded in 2011 and headquartered in Sunnyvale, CA, CrowdStrike Holdings, Inc. is a cybersecurity vendor that specializes in endpoint protection, threat intelligence and hunting, attack remediation, and offers various solutions to supplement security and network operations teams.
Its cloud-based architecture collects data across all its endpoint agents, analyzes the information within its cloud platform, and updates all of its customers’ security posture.
CrowdStrike sells packaged tiers of cybersecurity protection and offers individual security modules via its online marketplace.
And it’s my favorite cloud computing SaaS stock to buy now because it’s the best in breed cybersecurity firm in a huge market that will always be in high demand.
In 2015, cybercrime damages cost individuals, businesses, and governments around the world $3 trillion. And by next year, Cybersecurity Ventures estimates that number will double to $6 trillion.
With customers like Verizon, Honeywell, and The Home Depot (with a combined $600 billion market cap), CrowdStrike is highly likely to continue growing revenues double- or triple-digit percentages for years to come.
Year-to-date, CRWD has outperformed the S&P 500 by 118%. And if it continues this positive momentum, the company should easily be one of the top performing cloud computing SaaS stocks by the end of 2020.
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