3 Cloud Computing Stocks for Every Equity Investor
The cloud is a remote environment where computing power and data storage are hosted and software applications are served remotely via the internet. And while some investors might consider investing in cloud stocks risky because the technology is relatively new, there are three relatively stable cloud computing stocks worth a closer look.
Microsoft is transitioning its business from PCs to the cloud
Microsoft (NASDAQ:MSFT) is one of the most valuable companies in the world, with a market cap of over $1 trillion (yes, with a “t”). The company, once best known for the operating system installed on personal computers, began transitioning to the cloud as PC sales slowed with the proliferation of mobile devices.
Today, Microsoft’s Azure unit is one of cloud computing’s largest Infrastructure as a Service (IaaS) offerings. For the year ended June 30, 2019, Azure’s revenue grew 64%. According to Microsoft, Azure has an “unlimited [Total Addressable Market].” It represents about a third of Microsoft’s revenue and contributes largely to the company’s 69% gross margin.
Microsoft boasts a low debt-equity ratio of 0.71 and has more than $11 billion in cash. Its balance sheet is rock solid. It generates more than $3.00 per share in free cash flow annually; more than 1.5 times its dividend payout. Microsoft has paid a quarterly dividend since 2003 and has grown it at a compound annual growth rate (CAGR) of 10.41%. The yield is approximately 1.3%.