Cloud computing refers to the on-demand seamless access to computing resources such as servers, storage, databases, networks, software, analytics and intelligence via the Internet (the cloud) based on a pay-per-use pricing model. It marks a paradigm shift from traditional on-premises infrastructure storage to remote cloud-based storage facilities and relies heavily on virtualization and automation technologies.
Instead of purchasing, owning, and maintaining physical data centers and servers, organizations can access a virtual pool of shared resources from a cloud service provider when needed. This reduces operating costs, increases productivity with greater flexibility and improves scalability with higher economies of scale.
We’ve narrowed our search to five cloud computing-focused stocks that will deliver great returns in the short term. These are: Vijf9 Inc. FIVN, NetScout Systems Inc. NTCT, Parsons Corp. PSN, Booz Allen Hamilton Holding Corp. BAH and Okta Inc. OKTA.
Cloud computing is a system that mainly consists of three services: software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), and platform-as-a-service (PaaS). SaaS offers customers a license for a software application that uses a pay-as-you-go model or on-demand.
IaaS delivers operating systems to servers and storage via IP-based connectivity as part of an on-demand service. PaaS is a platform for creating software delivered over the Internet.
These stocks have strong earnings and revenue growth potential through 2025. Additionally, they have seen positive 2025 earnings estimates over the past 60 days. Each of our picks currently carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see it The complete list of today’s Zacks #1 Rank stocks can be found here.
The chart below shows the price development of our picks over the past six months.
Image source: Zacks Investment Research
Zacks Rank #1 Five9 provides intelligent cloud contact center software in the United States, India and internationally. FIVN offers a virtual contact center cloud platform that delivers a suite of applications that enable the breadth of contact center-related customer service, sales and marketing functions.
FIVN’s platform includes interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights and AI summaries. It makes it possible to manage and optimize customer interactions across voice, chat, email, web, social media and mobile channels directly or through the application programming interfaces.
FIVN saw its subscription revenue increase 20% in the third quarter of 2024, while total revenue rose 15%. FIVN posted an adjusted EBITDA margin of 20%, allowing it to generate operating cash flow of $41 million. Management has raised its 2025 outlook.
Five9 has projected revenue and earnings growth of 10.4% and 8.2%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 3.2% over the past 60 days.
The average short-term price target among brokerage firms represents an increase of 22.4% from the last closing price of $42.61. The broker’s price target is currently between $40 and $67. This indicates a maximum increase of 57.2% and a decrease of 6.1%.
Zacks Rank #1 NetScout Systems is a leading provider of business assurance – a powerful combination of service assurance, cybersecurity and business intelligence solutions – for today’s most demanding service providers, enterprise and government networks.
NTCT’s Adaptive Service Intelligence technology continuously monitors the service delivery environment to identify performance issues and provides visibility into network-based security threats, allowing teams to quickly resolve issues that could cause business disruption or impact the user experience. NTCT delivers unparalleled service visibility and protects the digital infrastructure that supports our connected world.
NetScout Systems has projected revenue and earnings growth of 10.4% and 8.2%, respectively, for 2025. The Zacks Consensus Estimate for 2025 has improved 3.2% over the past 60 days.
The average short-term price target among brokerage firms represents an upside of 34.1% from the last closing price of $22.69. The broker’s price target is currently between $22 and $38. This indicates a maximum increase of 67.5% and a decrease of 3%.
Zacks Rank #1 Parsons is a provider of technology-driven solutions. PSN focuses on the defense, intelligence and critical infrastructure markets. PSN provides integrated solutions and services in North America, the Middle East and internationally. PSN operates through the Federal Solutions and Critical Infrastructure segments.
PSN provides technical design and engineering services and software spanning cybersecurity, intelligence, defense, military training, connected communities, physical infrastructure and mobility solutions.
Parsons expects revenue and profit growth of 6.8% and 11.9% respectively for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 2.4% over the past 30 days.
The average short-term price target among brokerage firms represents an increase of 22.7% from the last closing price of $97.92. The broker’s price target is currently between $101 and $130. This indicates a maximum increase of 32.8% and no decrease.
Zacks Rank #2 Booz Allen Hamilton Holding offers a solid investment option for those seeking stability, as the company is driven by long-term government contracts and a strong reputation in defense and cybersecurity. BAH’s focus on operational efficiency and investments in artificial intelligence and cybersecurity have positioned the company for sustainable growth.
BAH is benefiting from its Vision 2020 strategy, which has accelerated organic sales growth, strengthened profitability and delivered significant workforce and order book growth. BAH’s VoLT strategy focuses on integrating speed, leadership and technology into the transformation process.
Booz Allen Hamilton Holding expects sales and earnings growth of 12.6% and 13.6%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 30 days.
The average short-term price target among brokerage firms represents an increase of 32.6% from the last closing price of $135.56. The broker’s price target is currently between $151 and $210. This indicates a maximum increase of 54.9% and no decrease.
Zacks Rank #2 Okta operates as an identity partner in the United States and internationally. OKTA offers a range of products and services used to manage and secure identities, such as Single Sign-On, which allows users to access applications in the cloud or on-premises from different devices.
OKTA’s Adaptive Multi-Factor Authentication provides a layer of security for cloud, mobile, web applications and data, while API Access Management enables organizations to secure APIs. Access Gateway allows organizations to extend Workforce Identity Cloud, and Okta Device Access allows end users to securely log in to devices with Okta credentials. OKTA also offers Universal Directory, a cloud-based system for storing and securing user, application and device profiles for an organization.
Okta has projected revenue and earnings growth of 6.8% and 4.9%, respectively, for the next fiscal year (ending January 2026). The Zacks Consensus Estimate for next year’s earnings has improved 2.5% over the past 30 days.
The average short-term price target among brokerage firms represents an increase of 26% from the last closing price of $84.76. The broker’s price target is currently between $75 and $140. This indicates a maximum increase of 65.2% and a decrease of 11.5%.
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