What are the best cloud stocks to buy today? In this time of uncertainty characterized by volatile market movements, economic contraction, and spiraling unemployment, finding stocks that would guarantee returns, let alone preservation of capital, seems like a herculean task. Some investors might think that the stock market is acting irrationally and puzzled by the quick recovery of stock prices sin the end of March. The market’s movements isn’t far away from economic realities. Economic reality is that long-term real interest rates are negative, the Federal Reserve is flooding the market with cheap credit, and the current economic slowdown is temporary.
This is the perfect environment to buy cloud stocks which aren’t negatively affected by the present economic predicament. If there is anything we have learnt from the coronavirus induced lockdowns, it is that more than ever, we would need technology to meet our existential needs.
In order to compile this list, we started with the top 10 stocks in the Global X Cloud Computing ETF (CLOU). According to its website, the ETF “seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware”.
Savvy investors have used hedge funds as a litmus test to gauge the profitability of stocks and to know the trajectory of market sentiment. Research carried out by Insider Monkey has shown that a select group of hedge fund holdings have consistently outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). As such, hedge fund sentiments are undoubtedly a useful indicator that experienced investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Based on hedge funds sentiment, we present 5 top cloud stocks among the 800+ hedge funds tracked by Insider Monkey. If you are hoping to find the most publicly traded cloud stocks such as Amazon(NASDAQ:AMZN) or Microsoft (NASDAQ:MSFT) on this list, you are in for a huge surprise. Global X didn’t include these cloud computing giants in its ETF.
5. Anaplan, Inc. (NYSE:PLAN)
Anaplan, Inc. (NYSE: PLAN) has witnessed increased interest from hedge fund managers. The software development company has a market capitalization of $6.093B. Over the past month, the stock has risen by 2.94% but has lagged behind the sector’s gain of 4.01%. Though Anaplan isn’t among the 30 most popular stocks among hedge funds, a total of 51 hedge funds hold long positions in this stock, a change of 30% from one quarter earlier. This is against a total of 21 hedge funds with a bullish view in the stock a year ago.
Coatue Management was the largest shareholder of Anaplan, with a stake worth $336.2 million reported as of the end of September. Trailing Coatue Management was Tiger Global Management LLC, which amassed a stake valued at $205.8 million. D1 Capital Partners, Melvin Capital Management, and Steadfast Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 6.88% of its 13F portfolio. HMI Capital is also relatively very bullish on the stock, setting aside 6.39 percent of its 13F equity portfolio to the stock.