The global cloud computing market is expected to grow at a CAGR of 17.5% between 2020 to 2025. The demand for cloud services is increasing rapidly with digital transformation, the pace of which has been accelerated by the COVID-19 pandemic. And it seems reasonable that the sheer convenience of using cloud services should keep driving demand even after the pandemic.
The cloud services market is dominated by large companies such as Google Cloud, Amazon Web Services, and Microsoft Azure. However, in addition to these players, there are several smaller companies that are benefiting significantly from the growing adoption of cloud platforms by businesses.
Companies including Micron Technology, Inc. (MU), Twilio, Inc. (TWLO), and 21Vianet Group, Inc. (VNET) are innovating quickly and are at the forefront of the cloud revolution. These companies either provide direct cloud services or offer infrastructure to build cloud services. So, their stocks are expected to see significant upside as the market for cloud computing expands.
Micron Technology, Inc. (MU)
MU provides semiconductor solutions globally. The company develops and manufactures various kinds of memory chips, semiconductor systems, and packaging solutions. Over the past year, MU has gained 41.3%.
MU recently developed and commenced the production of the world’s first 176-layer 3D NAND flash memory. The company also partnered with Tata Communications to create a global communications system that will help the worldwide deployment of Internet of Things (IoT) devices.
For the quarter ended November 30, 2020, MU’s gross margin improved 27%. The company’s operating income increased 67% during the same period.
MU is expected to see a revenue growth of 21.5% for the quarter ended February 28, 2021 and 16.8% in 2021. Its EPS is estimated to grow 45.2% in 2021 and at a rate of 18.4% per annum over the next five years.
How does MU stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Industry Rank
A for Overall POWR Rating
The stock is also ranked #7 of 99 stocks in the Semiconductor & Wireless Chip industry.
Twilio, Inc. (TWLO)
Twilio operates a cloud-based platform to integrate communications solutions within software applications. It has operations in the U.S. and internationally. Over the past year, TWLO’s stock has returned 223.6%.
TWLO recently completed the acquisition of Segment, which is a leading customer data platform. The company has also expanded its portfolio of IoT offerings with the addition of the Microvisor IOT platform. This platform aims to offer a one-stop destination to develop IOT devices.
For the quarter ended September 30, 2020, TWLO saw a 52% increase in revenue year-over-year. Its active customer accounts increased 21% during the same period.
TWLO’s revenue is estimated to increase 34% for the quarter ended March 31, 2021 and 31.7% in 2021. Its EPS is expected to rise 20.5% per annum over the next five years.
TWLO’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. It is ranked #1 of 13 stocks in the Software – SAAS industry.
21Vianet Group, Inc. (VNET)
VNET provides a range of services including hosting services, cloud services, broadband services, and business VPN services. VNET is the largest internet and data center service provider in China. Over the past year, VNET’s stock price has increased 316.2%.
The company recently promoted several executives, which is expected to strengthen its leadership and technical capabilities. It also recently executed a public offering, the proceeds from which are expected to be used for the expansion of the company’s data center infrastructure.
For the quarter ended September 30, 2020, VNET saw an increase in net revenues of 27% compared to the same period last year. Its adjusted cash gross profit increased 32.6% during the same period.
VNET’s revenue is expected to grow 32% for the quarter ended December 31, 2020 and 29.9% in 2021. Its EPS growth is expected to be 91.3% in 2021.
It is no surprise that VNET has a “Strong Buy” in our POWR Ratings systems with a grade of “A” in Trade Grade, Buy & Hold Grade, and Peer Grade. In the 81-stock Technology – Services industry, VNET is ranked #6.
MU shares were trading at $80.92 per share on Friday morning, down $0.38 (-0.47%). Year-to-date, MU has gained 7.64%, versus a 0.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.3 Top Cloud Stocks to Buy Now appeared first on StockNews.com