What is Cloud Computing?
Cloud computing (CC) is the technique of processing, storing, and managing data on a network of remote computers hosted on the internet rather than on a personal computer or local server. It is used by regular people for storing photos or documents and even for watching movies or listening to music on platforms like Netflix or Spotify. It is also essential for companies to store information. A pure-play cloud computing company concentrates all its efforts on a single line of business, and, as such, tech giants like Google, Microsoft, and Amazon are not pure-play given their diversified business focuses.
What Is CC’s Market Size & Projected Growth?
According to a Markets and Markets report, the cloud computing market will expand at a 17% CAGR between 2022 and 2027 which is an astronomical growth rate that should bode well for CC companies.
Which Are the Largest Pure-Play CC Companies?
Below is a list of the largest pure-play CC companies presented in descending order of their performances last week and in 2023 plus their current market capitalizations, price-to-1-year earnings growth (PEG) ratios with its variance from the sector median, and the latest news, commentary and/or analysis on each company.
The Pure-Play Cloud Computing Companies Index
- Business Model: provides data services, such as data reduction, data protection, and encryption, as well as storage protocols, including block, file, and object.
- Market Capitalization: $11.8B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 2.15
- PEG Variance from Sector Median: 6.8% above
- Latest News, Commentary and/or Analysis:
- Pure Storage looks quite promising in regards to its trends of return on capital
- Business Model: provides a platform that allows individuals and groups to collaborate and sign up for free through its website or app, or upgrade to a paid subscription plan for premium features.
- Market Capitalization: $10.3B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 1.04
- PEG Variance from Sector Median: 48.6% below
- Latest News, Commentary and/or Analysis:
- Dropbox Announces Fiscal 2023 Third Quarter Results
- Business Model: develops, markets, and sells cloud networking solutions that consist of a set of network applications, as well as gigabit Ethernet switching and routing platforms.
- Market Capitalization: $76.5B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 2.08
- PEG Variance from Sector Median: 3.2% above
- Latest News, Commentary and/or Analysis:
- How far off is Arista Networks from its intrinsic value?
- Business Model: provides businesses with access to important locations, partners, and opportunities to expand their digital services, enhance customer experiences, and increase their overall value.
- Market Capitalization: $75.4B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 3.53
- PEG Variance from Sector Median: 75.6% above
- Latest News, Commentary and/or Analysis:
- 5 Reasons That Make Equinix (EQIX) Stock a Solid Portfolio Pick
- Business Model: a REIT that provides data center, colocation, and interconnection solutions.
- Market Capitalization: $41.3B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 3.11
- PEG Variance from Sector Median: 54.7% above
- Latest News, Commentary and/or Analysis:
- Should You Retain Digital Realty (DLR) Stock in Your Portfolio?
- Business Model: provides a platform that enables users to collaborate on content internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security, and compliance features.
- Market Capitalization: $3.6B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 0.88
- PEG Variance from Sector Median: 56.1% below
- Latest News, Commentary and/or Analysis:
- Box Reports Fiscal Third Quarter 2024 Financial Results
- Business Model: operates an observability and security platform for cloud applications.
- Market Capitalization: $39.2B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 2.45
- PEG Variance from Sector Median: 21.8% above
- Datadog Upgraded to Buy: What Does It Mean for the Stock?
- Business Model: provides domain name registry services and internet infrastructure that enables internet navigation of .com and .net domains that support global e-commerce and also provides back-end systems for .cc, .gov, .edu, and .name domain names, as well as operates distributed servers, networking, security, and data integrity services.
- Market Capitalization: $20.3B
- Price-to-1 Year Earnings Growth (PEG) Ratio: 2.01
- PEG Variance from Sector Median: even
- Latest News, Commentary and/or Analysis:
- Verisign to Report Q4 and FY 2023 Financial Results on Feb.8th
Summary
The above 8 CC stocks were DOWN 2.6% last week, on average, and have an average market capitalization of $34.8B.
Why Is the PEG Ratio Included In the Above Analyses?
Since growth is a key component of a stock’s expected return, the inclusion of the PEG ratio provides a fuller picture of a company’s relative value in the market. The lower the PEG ratio – lower than 1.0 is best – the more the stock may be undervalued given its future (in this case projected 1-year) earnings while a ratio greater than 1.0 generally suggests a stock is overvalued.The PEG ratio should be used along with other tools such as the balance sheet, debt burden, and cash flow, or other valuation metrics that use the income statement. It’s also important to understand things like a company’s competitive advantage, its addressable market, and its long-term growth prospects.More By This Author:American Cannabis MSO Stocks Jumped 11.6% Last Week
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