JODY WHITE | The Globe And Mail
What are we looking for?
Companies set to profit from the growth of cloud computing.
While the idea of access to software and services delivered via an online network has been around since the 1960s, it wasn’t until the launch of Salesforce.com in the late ninties that tech companies began to provide useful products via the cloud.
More recently, we have seen tremendous growth in cloud computing offerings – which allow people and organizations to store digital data offsite – from Internet giants such as Amazon, Google and Facebook. This has created a market for large-scale storage services to handle the vast amount of documents, social media posts and shared photos that are uploaded to the cloud millions of times per day.
As illustrated in a recent Report on Business article, Canada, along with other northern countries, has become a favoured location for a growing number of such data centres due to our readily available supply of cold air – at least compared to Silicon Valley – a key component in cooling their power-hungry server infrastructure.
As cloud computing increasingly becomes the norm for both business and consumers, firms with a stake in this industry present opportunities for investors looking for growth.
How we did it
Today’s screen comes courtesy of Bloomberg’s Ronak Parikh, who searched for firms using the following criteria:
- must be traded on U.S. or Canadian exchanges;
- must have a market capitalization of $50-million or more;
- must derive 100 per cent of their revenue from hosting data processing and transaction services;
- have increased revenue over the past year.
What we found
Unsurprisingly, the list of companies that match such stringent criteria is short. Only eight made the grade, and only one (Limelight Networks) had negative returns in the last year.
The clear leader of the group for share-price appreciation is California-based Equinix Inc., which has almost doubled its stock price in the past year, while the top performer for revenue growth is 21Vianet Group Inc.
Keep in mind that these are tech stocks, which are notoriously volatile. As always, you should do your own research before buying any of the stocks listed here.
Eight Cloud Computing Opportunities
| Company | Ticker | 1-yr rev. gwth % | Market Cap (US$-mil) | P/E | Total % Rtn YTD |
|---|---|---|---|---|---|
| 21Vianet Group | VNET-Q | 51.37 | 532.9 | 238.21 | 2.51 |
| Rackspace Hosting | RAX-N | 26.99 | 9,939.7 | 98.27 | 67.24 |
| Akamai Technologies | AKAM-Q | 22.52 | 7,363.1 | 38.19 | 28.28 |
| Equinix Inc. | EQIX-Q | 19.73 | 9,877.2 | 79.09 | 99.68 |
| Zix Corp. | ZIXI-Q | 15.33 | 174.0 | 8.32 | 1.06 |
| InterXion Holding | INXN-N | 13.58 | 1,565.6 | 31.67 | 73.31 |
| Limelight Networks | LLNW-Q | 6.25 | 225.5 | -21.28 | |
| Premiere Global | PGI-N | 5.63 | 449.4 | 16.33 | 8.85 |
Source: Bloomberg
