What are the best cloud stocks to buy today?In this time of uncertainty characterized by volatile market movements, economic contraction, and spiraling unemployment, finding stocks that would guarantee returns, let alone preservation of capital, seems like a herculean task. Some investors might think that the stock market is acting irrationally and puzzled by the quick recovery of stock prices sin the end of March. The market’s movements isn’t far away from economic realities. Economic reality is that long-term real interest rates are negative, the Federal Reserve is flooding the market with cheap credit, and the current economic slowdown is temporary.
This is the perfect environment to buy cloud stocks which aren’t negatively affected by the present economic predicament. If there is anything we have learnt from the coronavirus induced lockdowns, it is that more than ever, we would need technology to meet our existential needs.
In order to compile this list, we started with the top 10 stocks in the Global X Cloud Computing ETF (CLOU). According to its website, the ETF "seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware".
Savvy investors have used hedge funds as a litmus test to gauge the profitability of stocks and to know the trajectory of market sentiment. Research carried out by Insider Monkey has shown that a select group of hedge fund holdings have consistently outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). As such, hedge fund sentiments are undoubtedly a useful indicator that experienced investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10most profitable companiesin the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latesthedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Based on hedge funds sentiment, we present 5 top cloud stocks among the 800+ hedge funds tracked by Insider Monkey. If you are hoping to find the most publicly traded cloud stocks such as Amazon(NASDAQ:AMZN) or Microsoft (NASDAQ:MSFT) on this list, you are in for a huge surprise. Global X didn't include these cloud computing giants in its ETF.
5. Anaplan, Inc. (NYSE:PLAN)
Anaplan, Inc. (NYSE: PLAN)has witnessed increased interest from hedge fund managers. The software development company has a market capitalization of $6.093B. Over the past month, the stock has risen by 2.94% but has lagged behind the sector's gain of 4.01%. ThoughAnaplanisn’t among the 30 most popular stocks among hedge funds, a total of 51 hedge funds hold long positions in this stock, a change of 30% from one quarter earlier. This is against a total of 21 hedge funds with a bullish view in the stock a year ago.
Coatue Management was the largest shareholder of Anaplan, with a stake worth $336.2 million reported as of the end of September. Trailing Coatue Management was Tiger Global Management LLC, which amassed a stake valued at $205.8 million. D1 Capital Partners, Melvin Capital Management, and Steadfast Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 6.88% of its 13F portfolio. HMI Capital is also relatively very bullish on the stock, setting aside 6.39 percent of its 13F equity portfolio to the stock.
4. Twilio Inc. (NYSE:TWLO)
Twilio Inc. (NYSE: TWLO)ranks 4th with 52 bullish hedge fund positions. The company provides a cloud communications platform that enables developers to build, scale, and operate communications within software applications in the United States and internationally. The stock has a market capitalization of $36.646bn. Over the past month, the stock has increased by 25.4%, and increased by 156.5% so far this year.
Twilio’s (NYSE:TWLO) second-quarter performance is likely to have benefited from an increasing clientele, which increased by 11,000 new clients in the last quarter, taking the company's total active customer count to 190,000. The company’s expanding foothold among leading enterprises is also likely to have been a key catalyst for this growth. Twilio’s solid efforts to fortify its global footprint has attracted the attention of 52 hedge funds who have retained the stock in their portfolios.
SCGE Management was the largest shareholder of Twilio Inc. (NYSE:TWLO), with a stake worth $249.1 million reported as of the end of September. Trailing SCGE Management was Foxhaven Asset Management, which amassed a stake valued at $242.9 million. Generation Investment Management, Tiger Global Management LLC, and Whale Rock Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Foxhaven Asset Management allocated the biggest weight to Twilio Inc. (NYSE:TWLO), around 13.01% of its 13F portfolio. Toronado Partners is also relatively very bullish on the stock, earmarking 10.32 percent of its 13F equity portfolio to the stock.
3. Workday Inc (NASDAQ:WDAY)
Workday Inc (NASDAQ: WDAY) ranks third in our list with a total of 55 bullish hedge fund positions. It provides enterprise cloud applications worldwide. Its applications help its customers to manage critical business functions and optimize their financial and human capital resources. The company has a market capitalization of $41.878B. Over the past month, the stock has underperformed by -1.21% but has increased by 9.82% YTD. Workday Inc (NASDAQ: WDAY) reported fourth-quarter fiscal 2020 non-GAAP earnings of 50 cents per share. The company secured deals with several high-profile companies such as Southwest Airlines, Wells Fargo, Prudential Company of America, the U.K.-based Natwest Group, and Spain-based Banco Santander. This saw the company's revenues rallying by 24.7% year over year to $839.7 million.
The largest stake in Workday Inc (NASDAQ:WDAY) was held by Bares Capital Management, which reported holding $394.8 million worth of stock at the end of September. It was followed by Viking Global with a $320.6 million position. Other investors bullish on the company included Tiger Global Management LLC, Duquesne Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Bares Capital Management allocated the biggest weight to Workday Inc (NASDAQ:WDAY), around 14.23% of its 13F portfolio. Half Sky Capital is also relatively very bullish on the stock, earmarking 11.46 percent of its 13F equity portfolio to the stock.
2. Coupa Software Incorporated (NASDAQ:COUP)
Coupa Software Incorporated (NASDAQ: COUP) ranks second with a total of 66 bullish hedge funds. It is a cloud-based business spend management platform. Its platform connects organizations with suppliers globally, providing visibility into how companies spend money, thereby enabling them to gain better financial control and achieve savings that drive profitability. The company has a market capitalization of $20.347bn. Over the past month, the stock has increased by 10% while its YTD performance is 95.3%.
Coupa’s (NASDAQ: COUP) revenues have increased by 47% year over year to $119.2 million in the last reported quarter. The company provides services to businesses such as CODA Biotherapeutics, The Howard Hughes Corporation, The Salvation Army, Vroom.com and Workiva.
Sylebra Capital Management held the most valuable stake in Coupa Software Incorporated (NASDAQ:COUP), which was worth $304.7 million at the end of the third quarter. On the second spot was Lone Pine Capital which amassed $296.8 million worth of shares. Alkeon Capital Management, Whale Rock Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Crosslink Capital allocated the biggest weight to Coupa Software Incorporated (NASDAQ:COUP), around 19.93% of its 13F portfolio. Center Lake Capital is also relatively very bullish on the stock, dishing out 17.38 percent of its 13F equity portfolio to the stock.
1. Netflix, Inc. (NASDAQ:NFLX)
Netflix, Inc. (NASDAQ: NFLX)is by far the most popular cloud stockin our list with a total of 109 hedge funds. Netflix provides subscription streaming entertainment service. It offers TV series, documentaries, and feature films across various genres and languages. The company has a market capitalization of 214.84B. The stock has increased by 46.8% so far this year.
The streaming giant is one of the biggest beneficiaries of the COVID-19 pandemic, gaining 10.1 million paying customers in the second quarter. The company has added 26 million new subscribers this year alone in contrast to 28 million new subscribers for the whole of 2019. The company’s revenues increased by almost 25% to $6.1 billion, while profits jumped to $720 million in the second quarter, up from $271 million a year ago.
Netflix, Inc. (NASDAQ: NFLX) is in the portfolio of 109 hedge fund managers. SRS Investment Management was the largest shareholder of Netflix, Inc. (NASDAQ:NFLX), with a stake worth $1270.9 million reported as of the end of March. Trailing SRS Investment Management was Citadel Investment Group, which amassed a stake valued at $990.3 million. Tiger Global Management, Matrix Capital Management, and Viking Global were also very fond of the stock, giving the stock large weights in their portfolios.
Disclosure: None. This article is originally published at Insider Monkey.