Rapid advancements in technologies, increasing internet penetration, and rising dependency on virtual working environments are leading organizations to adopt cloud computing services increasingly. Businesses are adopting cloud computing for security, cost savings, mobility, loss prevention, flexibility, and several other reasons. According to a report by IDC, “whole cloud” spending is expected to reach $1.3 trillion by 2025.
The increasing acceptance of Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS), among businesses, and government initiatives to support innovative technologies in several sectors, including banking, financial services, and insurance (BFSI), retail, and consumer goods, should further drive the cloud computing market’s growth. The global cloud computing market is expected to reach $947.3 billion by 2026, registering a CAGR of 16.3%.
Therefore, we think it could be wise to bet on fundamentally sound cloud computing stocks Paycom Software, Inc. (PAYC), Mimecast Limited (MIME), and Qualys, Inc. (QLYS).
Click here to check out our Cloud Computing Industry Report for 2021
Paycom Software, Inc. (PAYC)
PAYC, in Oklahoma City, Okla.., provides cloud-based human capital management (HCM) solutions delivered as Software-as-a-Service (SaaS). The company offers talent acquisition, time and labor management, payroll, talent management, and HR management solutions. PAYC’s applications allow clients and their employees to access and manage administrative processes, including onboarding employees directly, administering payroll activities, managing performance, terminating employees, and administering post-termination health benefits, such as COBRA.
PAYC’s total revenues increased 30.4% year-over-year to $256.19 million in the third quarter, ended September 30, 2021. The company’s operating income grew 27.2% from its year-ago value to $43.31 million. Its net income rose 10.5% from the prior-year quarter to $30.38 million. Also, the company’s EPS increased 10.6% year-over-year to $0.52.
Analysts expect PAYC’s revenue to increase 24.2% year-over-year to $1.3 billion in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is estimated to grow 26.9% in the current year. The stock has gained 30.5% in price over the past six months.
PAYC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Growth, Sentiment, and Quality. We have also graded PAYC for Stability, Momentum, and Value. Click here to access all PAYC’s ratings.
PAYC is ranked #29 of 168 stocks in the Software - Application industry.
Mimecast Limited (MIME)
MIME is a global provider of cloud security and risk management services for corporate information and email that operates primarily in Europe, North America, Africa, and Australia. The London-based company delivers E-mail Security and Cyber Resilience Extension offerings, domain-based message authentication, brand exploit protection, threat intelligence, and its application programming interface (API) ecosystem.
During its fiscal second quarter, ended September 30, 2021, MIME’s revenue increased 20% year-over-year to $147.23 million. The company’s gross profit grew 22.4% from its year-ago value to $113.76 million. Its income from operations rose 113.1% from the prior-year quarter to $21.5 million. Also, the company’s net income increased 75% year-over-year to $17.58 million.
MIME’s revenue is expected to increase 18.2% year-over-year to $592.77 million in its fiscal 2022. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS is expected to increase 21.1% in the current year. The stock has surged 81.8% in price over the past nine months and 81.7% over the past year.
MIME’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Growth, Quality, and Sentiment.
In addition to the POWR Rating grades I’ve just highlighted, one can see MIME’s ratings for Value, Momentum, and Stability here. The stock is ranked #12 in the Software - Application industry.
Qualys, Inc. (QLYS)
Incorporated in 1999, QLYS offers vulnerability management solutions as applications through the web using a SaaS model. The company and its integrated apps help businesses simplify security operations, deliver critical security intelligence, and automate the full spectrum of auditing, compliance, and protection for IT systems.
This month, QLYS added Infrastructure as Code (IaC) scanning to its CloudView app. This IaC assessment is integrated into the software development cycle to ensure that only code conforming to the organization's security standards is deployed. The company believes that this should enable detection and remediation of misconfigurations early in the development cycle, removing risk in the production environment.
QLYS’ revenues increased 12.7% year-over-year to $104.93 million for the third quarter ended September 30, 2021. The company’s gross profit grew 13.8% from its year-ago value to $82.46 million. Its income from operations rose 21.6% from the year-ago value to $31.98 million. Also, the company’s net income increased 22.1% year-over-year to $27.77 million.
Analysts expect QLYS’ revenue for its fiscal year 2022 to be $464.37 million, representing 13.3% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 10.8% in the current year. The stock has soared 33.5% in price over the past nine months and 41.2% over the past year.
It is no surprise that QLYS has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Quality.
Click here to see the additional POWR Ratings for QLYS (Momentum, Sentiment, Value Growth, and Stability). QLYS is ranked #6 of 27 stocks in the Software – Security industry.
Click here to check out our Cloud Computing Industry Report for 2021
PAYC shares were trading at $442.24 per share on Monday morning, up $4.40 (+1.00%). Year-to-date, PAYC has declined -2.21%, versus a 25.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.3 Cloud Computing Stocks to Buy in December appeared first on StockNews.com