The practical realities of cloud computing for consumers vs. the investing angle of cloud stocks are very different.
Jon Markman, editor of the Trader’s Advantage investing newsletter, spoke with me recently about the space and how investors can best take advantage of this high-tech trend.
The big guys like Oracle (ORCL), Hewlett-Packard (HP) and SAP (SAP) might sound like the most logical choices for cloud computing, but Jon says they just don’t get it. Smaller stocks often have a better knack for adapting and zeroing in on smaller portions of the market — with great success.
One stock that Jon likes right now is WorkDay (WDAY), a midsize company that provides human resources solutions. At $13 billion in market capitalization and a stock that just had its IPO about a year ago, it doesn’t sound like Workday has given investors a lot to go on. But WDAY stock is up 56% since that offering, and has proven itself a powerful player in a short time.
Other stocks Jon likes are Cornerstone OnDemand (CSOD), which helps with employee recruitment and training, and Examworks (EXAM) that helps provide medical panels and peer reviews in a digital age.
While you might think the big guys will simply buy out these smaller players and own the space, it doesn’t always work out that way — and Jon says there is considerable upside ahead in the next few years for these fast-growing cloud computing stocks.
