Stock Watch

3 growth stocks trading near an all-time high share price

The global cloud computing market is set to grow from $272bn in 2018 to $623.3bn by 2023. Such fast-paced growth has seen companies in this sector experience huge movements in share prices. Many have broken through, or are approaching, record levels with little sign of slowing down.

We look at three cloud-computing growth stocks that could break out to new highs this month.

$623.3bn

Value of the cloud computing market by 2023

 

Okta [OKTA]

Online security company Okta has gained a massive 305% since going public in March 2017. At the time of writing, the stock was trading near its 52-week high as investors continue to back the company. 

Going in the stock’s favour are stellar financials that have crushed analyst expectations. In the most recent quarter, Okta saw revenue increase 50% to come in at $115m, well above the predicted $107.9. Subscription revenues also increased a massive 53% over 2018, hitting $108.5m.

 

Market cap$10.72bn
Quarterly Revenue Growth (YoY)49.90%
EPS (TTM)-1.17
Profit Margin-31.43%

Okta stock vitals, Yahoo finance, 23 April 2019

 

Driving growth has been a spate of acquisitions over the past couple of years, including the recent purchase of automation company Azuqua for $52.5m.

Despite these numbers Okta announced that it expected a net loss per share of $0.48 to $0.53 in 2019. This is considerably higher than analyst predictions for a $0.12 loss, triggering a 9% drop in share price. Something investors will have to take into account if they plan to back the stock.

 

Veeva Systems [VEEV]

Veeva Systems is just 1.96% off an all-time high, having climbed over 52% since the start of the year. Despite having a volatile 2018, which saw some hefty drops, the stock has gained 547% over the course of 5 years.Veeva Systems 1-year share price performance, CMC Markets, 23 April 2019

 

Growth has come from the company’s ability to take on more high-worth customers, which has grown revenues at a CAGR of 28.2% over 3 years. In its 2018 results, the company saw a 25% increase in revenues on the previous year, coming in at $862.2m. 

Money brought in from subscription services was also up 24% year-on-year, showing that the company is more than capable of increasing its regular income stream.

Veeva is now on the warpath to become a market leader in the clinical data management market. To get there it's continuing to nab contracts with top pharmaceutical companies. Over the past year, it has picked up five top 20 pharmaceutical firms as clients, including two in the top 10. If it continues to pick up industry leaders, the share price could continue to climb.

 

Arista Networks [ANET]

Arista’s share price is up almost 50% this year, trading around the £330 level. This strong performance makes the NASDAQ's 20% gain seem quaint in comparison. An incredible feat, considering the stock had lost 8.8% in value in 2018, having dropped 22% after a disappointing earnings announcement in February.Arista Networks 1-year share price performance, CMC Markets, 23 April 2019

 

Fuelling this turnaround are 2018 results that saw revenue up 30.7% compared to the previous year. 

The stock also has some notable fans. Last Monday, Bank of America Merrill Lynch raised their price target on the stock to $360 from $300. Hitting this would see a 10% upside on the current price.

Goldman Sachs have also backed the stock, adding Arista to their vaunted “Americas Conviction List” last month. Coming off the list was Arista’s competitor, Cisco Systems. 

Arista is now number 7 in the IBD 50 list of fastest growing companies, and the stock could soar higher if the company’s expansion into new markets pays off. Arista have launched a foray into the highly lucrative financial services sector, having traditionally focused on internet companies as their primary customer base.

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