The 25 Cloud Stocks To BUY In 2022

I’m publishing this series to discuss a topic that I follow closely - cloud stocks, trends, strategy, acquisitions, and more. Please subscribe to my Cloud Stock Analysis series and never miss an article. I like fundamentals-focused business building, and outline the principles of fundamentals-focused business building in my free Bootstrapping course.

I have been analyzing SaaS companies for over a decade and PaaS companies for nearly 3 years since I wrote SaaS Companies NEED PaaS Strategy. Based on this body of work, I have shortlisted 25 cloud stocks that I think would be worth buying.

The top of the list has PaaS stocks with a robust ecosystem and marketplace.

1. Salesforce.com

Salesforce is a stellar example of a well-implemented PaaS strategy. Its App Exchange has amassed a wide array of companies and over a thousand consultants building apps on its platform. The AppExchange has helped companies like Vlocity, Veeva build industry-specific solutions and build sustainable businesses. Not only do these companies see billion-dollar valuations , but the ecosystem has also helped Salesforce expand its presence into niche verticals. 

It has made some key acquisitions Mulesfoft for $6.5 billion in 2018, Tableau for $15.7 billion in 2019, Slack for $27.7 billion in 2020, and Robotic Process Automation (RPA) player Servicetrace for an undisclosed sum in 2021. Salesforce is leveraging these acquisitions successfully and expects to end 2021 with revenues of $26.39-$26.4 billion and to end 2022 with revenues of $31.7-$31.8 billion.

Salesforce’s stock has dipped to $229.19 and could be a good buying opportunity. Its 52-week high was $311.75 in November and 52-week low of $202.51 was in March. Its market cap is $224 billion.

2. Atlassian

Atlassian is one of the very few companies to have a fully fleshed out PaaS strategy and there is a lot that other SaaS companies can emulate to win in PaaS. It made over $100M from PaaS in 2020. We have seen it grow from a bootstrapped startup focused on its fundamentals to a company with over $2B in revenue.

Its stock is trading at $313.75 with a market cap of $79.3 billion. It hit a 52-week high of $483.13 in November and a 52-week low of $198.8 in March.

3. Twilio

I believe Communications PaaS leader Twilio is one player who has nailed the PaaS strategy. In 2014, when I had spoken with its CEO Jeff Lawson, the company had over 400,000 developers. Today, Twilio boasts of a platform that has over 10 million developers globally that help support over 800 billion interactions across its platform. Its recent acquisitions of Segment.io and ZipWhip give it a new impetus in the customer engagement space. Its FY21 revenue grew 55% to $1.76 billion and FY22 revenue is expected to grow 32% to $3.65 billion.

Its stock is currently trading at $238.75 with a market cap of $42.6 billion. It hit a 52-week high of $457.30 in February 2021. It hit a 52-week low of $231.1 this week. It is a great buying opportunity for long-term investors.

4. Smartsheet

Smartsheet has built a successful platform for enterprise collaboration. It has a rich feature set that allows developers to build apps, integrators, and connectors that power collaboration capabilities by automatically synchronizing data from critical business platforms. It expects to end the year with revenues of $544-$545 million.

Smartsheet has been focused on developing its PaaS capabilities through WorkApps. Released last year, WorkApps is Smarsheet’s no-code platform that empowers users to build intuitive web and mobile applications to streamline business and simplify collaboration. More than 50,000 WorkApps have been created to date that are helping create composite solutions across an organizations’ Smartsheet deployment and get the maximize yield from their existing cloud investments such as Microsoft 365 and Google Workspace.

Its stock is trading at $68.3, with a market capitalization of $8.6 billion. It hit a 52-week low of $51.11 in May last year. It had touched a 52-week high of $85.7 in February last year.

5. Freshworks

I have followed Freshworks (Nasdaq: FRSH) from the days when its founder, Girish Mathrubootham, met me in 2011 at a TiE Chennai event. I have always seen potential in its offerings. Freshworks, nee Freshdesk, has come a long way since then. What began as a CX offering, has expanded to employee and IT support, to messaging and cloud telephony, and to a unified customer vision that leverages platforms, AI and ML capabilities.

Freshworks has been promoting its PaaS capabilities as well. Recently, it hosted a Refresh App Challenge that offers developers the opportunity to invent new ideas to make work easier for customer support service agents, and IT service managers. The event was helpful in building stronger awareness about Freshworks’ Neo Platform. Neo already has an active marketplace that provides more than 30,000 of Freshworks’ customers with access to more than 1200 apps by these developers.

Freshworks went public in September 2021 at a list price of $36 and a valuation of $10.1 billion. It hit a high of $53.36 and a low of $23.10. Its stock is currently trading at $22.11 at a market cap of $5.8 billion. Another great opportunity to buy into the success of an Indian decacorn.

6. Zendesk

Cloud Customer Service software company Zendesk recently acquired Momentive, formerly SurveyMonkey, for $4.1 billion. The acquisition will help it create a customer intelligence company and accelerate Zendesk’s revenue plan to $3.5 billion in 2024, instead of the earlier target of 2025.

It is currently trading at $98.36 with a market capitalization of $11.9 billion. It touched a 52-week high of $166.60 in February and a 52-week low of $92.00 in November.

7. Hubspot

I like inbound marketing specialist Hubspot for its excellent management and a sticky platform. It has been an avid follower of a PaaS strategy. It has a dedicated app partner program geared toward developers and companies that want to grow their business by building apps on HubSpot’s open platform. This helps companies grow their business by distributing their apps to HubSpot’s growing customer base. Developers can create apps and then list them on its App Marketplace to access HubSpot’s customer base. 94% of HubSpot’s more than 100,000 customers use the apps on its marketplace to grow business. HubSpot’s reports reveal that each customer averages over seven third party app installs.

According to a recent white paper published by IDC, the global HubSpot partner ecosystem revenue, classified as revenue generated by the several app and solutions partners that provide the products and services for HubSpot’s CRM platform software, is projected to grow from $4.8 billion in 2020 to $12.5 billion in 2024. HubSpot has built its platform with extensibility in mind, enabling customers to easily integrate their HubSpot instance with other services and solutions that are tailored to their specific needs. As its ecosystem grows, the options available to customers to help them derive higher value from its platform will grow as well.

HubSpot expects to end the year with revenues of $1.287-$1.289 billion.

Its stock is trading at $525.41 with a market capitalization of $24.8 billion. It touched a 52-week high of $866.00 in November and a 52-week low of $347.78 a year ago.

8. Coupa

Coupa is an interesting company because of its recent foray into PaaS. It recently launched its new Coupa App Marketplace, providing customers with an easier and smarter way to extend the power of the Business Spend Management (BSM) platform. The Coupa App Marketplace is among the first marketplaces in the comprehensive BSM space to help extend a customer’s existing tech stack and deepen their BSM capabilities so they can share information, automate workflows, and conduct key tasks. It connects businesses with certified, pre-built solutions and helps create a seamless way to tap into a global community of BSM partners. Businesses will have the ability to develop genuine partnerships that enable them to thrive in their environment.

Coupa expects to end the year with revenues of $717-$718 million. Its stock is trading at $141.97 with a market capitalization of $10.6 billion. The stock hit a 52-week high of $377.04 in February last year and a 52-week low of $146.43 in December.

9. Wix

Wix has been focused on a PaaS strategy that allows developers to develop Web Apps that can be accessed by more than 190 million users worldwide. It allows developers to use its various REST APIs to access Wix user’s site data. Its app marketplace known as WixAppMarket has several apps that meet use cases ranging from marketing services, online sales, media and content improvement, design services to service and event management. 

In 2021, it has acquired an AI re-engagement solution Rise.ai to extend its e-commerce platform and restaurant ordering and payment solution SpeedETab to extend its full-service restaurant platform. Recently, Wix is focusing on the fitness industry with its Wix Fit platform.

Its stock is trading at $145.63 with a market capitalization of $8.3 billion. It hit a 52-week high of $362.07 in February 2021 and a 52-week low of $133 in December.

Large TAM Stocks

Let us now look at stocks that operate in markets with a large TAM.

10. Microsoft

Microsoft tops this list of Large TAM cloud stocks. After the $19.7 billion acquisition of Nuance’s conversational AI capabilities, Microsoft has followed it up with three much smaller acquisitions in the security space: $500 million acquisition of RiskIQ, a leader in global threat intelligence and attack surface management; IoT security startup ReFirm Labs; and Cloud Infrastructure Entitlement Management (CIEM) provider CloudKnox Security.

Microsoft has a history of building growth engines from its acquisitions like LinkedIn and GitHub. It would be interesting to see how it leverages its recent acquisitions.

Its stock is trading at $313.88 with a market capitalization of $2.36 trillion. It hit a 52-week high of $349.67 in December and a 52-week low of $211.94 a year ago.

11. Docusign

In the mission critical document signature space, we like DocuSign for its focus on the entire document management life cycle. It is the leader in the e-signature market with more than 70% of the global digital signature and document services market. The continued pandemic and lockdown conditions have helped it remain in the lead. 

DocuSign estimates the agreement cloud opportunity to be a $50 billion market with digital transformation remaining a high priority for organizations worldwide. It has over 350 ISV integrations on its platform, including the recently announced integrations with Slack and with Workplace from Facebook. 

DocuSign expects to end the year with revenues of $2.083-$2.089 billion. Its stock is trading at $143.1 with a market capitalization of $28.2 billion. It had fallen to a 52-week low of $131.51 in November and hit a 52-week high of $314.76 in August. Another great buying opportunity!

12. RingCentral

Cloud-based communication services provider RingCentral is cashing in on the hybrid work environment. For the full year, it expects revenues of $1.539-$1.545 billion, representing an annual growth of 30% to 31%.

Its stock is currently trading at $173.09 with a market capitalization of $16 billion. It touched a 52-week high of $449.00 in February 2021 and a 52-week low of $168.40 this week.

13. Pure Storage

We like Pure Storage because of its recent acquisition of Portworx, a Kubernetes Data Services Platform. Pure Storage is a strong player in the global NAND Flash Memory market, which is expected to grow from $18.5 billion in 2020 at 22% CAGR to $74.3 billion by the end of 2027. 

It expects revenues of $2.1 billion for fiscal year 2021. Its stock is trading at $30.66 with a market capitalization of $9.1 billion. It hit a 52-week high of $35.09 in December and a 52-week low of $16.79 in July.

14. Veeva

Veeva is a mid-sized player that has built a strong vertical cloud in pharma and is now eyeing the data cloud. We love its CEO Peter Gassner. Read my interview with him. Veeva expects to end the current year with revenues of $1.815-$1.825 billion and is on track to meet its 2025 revenue target of $3 billion with growth coming from core CRM and Veeva OpenData.

Veeva’s stock is currently trading at $251.41 with a market capitalization of $38.6 billion. It had peaked to a high of $343.96 in August. It hit a 52-week low of $235.74 in May.

15. ServiceNow

ServiceNow is witnessing robust growth across the entire gamut of its offerings including IT Service Management (ITSM), IT Operations Management (ITOM), Customer Workflow, and Creator Workflow segments. Nothing appears to be standing in the way of this giant. It expects revenues of $5.565-$5.57 billion for the current year.

Its stock is currently trading at $574.04 with a market capitalization of $114.2 billion. It hit a 52-week high of $707.6 in November and a 52-week low of $448.27 in May. An unmissable buying opportunity!

Cyber Security Stocks

Let’s now look at what would be the top cyber security stocks to buy.

16. Palo Alto Networks

Palo Alto Networks has been growing steadily with the help of acquisitions. Its revenue grew 25% to $4.3 million and its expects to end FY22 with revenue of $6.6-$6.65 billion.

Its stock is trading at $532.91 with a market capitalization of $52.6 billion. It was trading at a 52-week high of $572.67 in December and a 52-week low of $311.56 in March 2021.

17. Zscaler

Zscaler is the leader in the Secure Web Gateways market. Its performance last year has been driven by the Solar Winds attack and its focus on federal agencies. It has also been making some strategic acquisitions.

Its revenue grew 56% to $637 million and its expects to end the current year with revenue of $940-$950 million.

Zscaler’s stock is currently trading at $260.21 with a market capitalization of $36.4 billion. It hit a 52-week low of $157.03 in May last year and a 52-week high of $376.11 in November.

18. Qualys

We like Qualys for its focus on monetization and strategy of acquiring smaller, relevant players. It expects to end the year with revenues of $409.5-$410.1 million.

Qualys’s stock is currently trading at $127.41 with a market capitalization of $4.9 billion. It touched a 52-week high of $148.84 in January 2021 and a 52-week low of $90.26 in March 2021.

19. Okta

We like IAM leader Okta for its PaaS strategy and the way it has built a robust developer community around its platform. The Okta Integration Network (OIN) has a library of over 7,065 pre-integrated apps that include use cases ranging from security analytics to enforcement. With its $6.5B acquisition of Auth0, it now targets the $25B customer identity market.

Okta expects to end fiscal 2022 with revenues of $1.243-$1.250 billion.

Okta’s stock is currently trading at $202.22 with a market cap of $31.5 billion. It touched a 52-week high of $294.00 in February 2021. It hit a 52-week low of $192.75 this week.

Others

Some other stocks that we like across categories:

20. Anaplan

We have been following Anaplan much before it became a unicorn and went public, and we like what we see. We covered it as a case study on scaling an enterprise software company. It has a strong focus on fundamentals and has an active PaaS strategy.

It expects FY 22 revenue between $583.5 and $584.5 million. Its stock is trading around $44.77 with a market capitalization of $6.6 billion. It touched a 52-week high of $86.17 in February 2021. The stock had fallen to a 52-week low of $39.9 in November last year.

21. Nutanix

We like Nutanix for its Kubernetes PaaS strategy. Its revenue grew 7% to $1.39 billion in 2021.

Its stock is currently trading at $31.14 with a market capitalization of $6.75 billion. It was trading at a 52-week high of $44.5 in August last year. It fell to a 52-week low of $25.15 in March last year.

22. PagerDuty

We have been covering SaaS-based digital operations management platform PagerDuty since it went public in 2019, and we like the way its been building out its API strategy. For FY 22, it expects revenue to grow 30%-31% to $278.5 million – $279.5 million.

Its stock is currently trading at $31.64 with a market capitalization of $2.7 billion. It touched a 52-week high of $58.36 in February 2021 and a 52-week low of $29.15 in December.

23. ON24

We have had a long association with digital experience platform ON24, going as far back as 2007 when I interviewed Sharat Saran. It is on the list because it is likely to benefit from the ongoing Covid-related disruption in in-person events. It ended the fiscal year 2020 with revenues growing 76% to $156.9 million. For the current fiscal year 2021, ON24 expects revenues of $207.5-$210.5 million.

Its stock is trading at $16.75 with a market capitalization of $796.8 million. ON24 had gone public in February 2021 when it raised $428 million at a list price of $50. It hit a 52-week high of $81.98 soon after listing and a 52-week low of $15.07 in December. 

24. Alteryx

We like Alteryx for the strong momentum it is showing for its subscription-based end-to-end analytics platform and it is likely to get acquired by either SAP or a private equity firm like Vista or Thoma Bravo. It was bootstrapped initially before it raised $163 million.

For the full year 2021, it expects revenue of $525-$530 million. Its stock is trading around $57.89 with a market cap of $3.9 billion. It hit a 52-week high of $140.36 in February 2021 and a 52-week low of $55.52 this week.

25. Bill.com

Last, but not the least is Bill.com, a leading cloud-based financial software provider for back-office financial processes at SMBs. We have had its CEO and founder René Lacerte as a guest on our 1Mby1M entrepreneurship roundtable, and it is a great pleasure to see how the company has scaled quietly.

Since its super IPO in early 2020, its revenue has been growing steadily at 45% to $157.6 million in 2020 and at 51% to $238.3 million in 2021. For the Fiscal year 2022, it expects revenues of $476-$480 million.

Bill.com had listed on the NYSE in December 2019 when it raised $216 million at an IPO price of $22 apiece and a valuation of $1.6 billion. Its stock is currently trading at $202.9 with a market capitalization of $20.8 billion. It had fallen to a 52-week low of $109.64 in January last year. It hit a 52-week high of $348.50 in November.

There are other stocks like Shopify that should have been in this list, but we went ahead with some lesser known gems like Bill.com. The dip in the market is the perfect time to buy into such stocks.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in most of these companies.

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Photo Credit: Sharon Ang from Pixabay