Zoom Video Communications ZM is undoubtedly one of the biggest gainers of the coronavirus-induced lockdowns, shelter-at-home guidelines and social-distancing trend. The stock has skyrocketed 464.2% on a year-to-date basis.
Demand for this currently Zacks Rank #3 (Hold) company’s cloud-native unified communications platform, which combines video, audio, phone, screen sharing and chat functionalities, jumped significantly, driven by work-from-home and online learning wave.
As vaccination programs will take several months to cover a major portion of the global population, social-distancing measures are required to keep the infection rate flat. This will need continuation of work-from-home and online learning, which in turn, could drive Zoom’s top line significantly.
Moreover, a hybrid model that includes a couple of days of work from home is likely to be popular among employees. This also bodes well for Zoom.
4 Software Stocks to Buy in 2021
Meanwhile, the software space is expected to see a solid 2021 on strong demand for SaaS-based services amid the ongoing digital transformation as well as remote working, learning and diagnosis trends. Per Gartner’s latest report, Enterprise Software-related IT spending is expected to grow 7.2% year over year in 2021 following an estimated 3.6% decline in 2020.
Here we pick four fundamentally solid software stocks that offer good investment opportunities and are well-poised for a Zoom-like run in 2021.
NIC EGOV is benefiting from the accelerating rate of digital governance and mix shift to SaaS. The company’s expanding customer base is a boon. Moreover, new contract wins across the states of Iowa and Florida remain key catalysts.
Further, this currently Zacks Rank #1 (Strong Buy) company is benefiting from the continued momentum in COVID-19 testing, based on partnerships with Impact Health and NEXT Marketing. You can see the complete list of today’s Zacks #1 Rank stocks here.
Markedly, NIC’s solutions are gaining a huge traction as they help the general public tackle coronavirus-led disruptions. For instance, cash payment solution CheckFreePay is aiding residents to make their property tax payments in cash. Moreover, Alabama Department of Revenue is now accepting online appointments for a variety of services through TeleGov, a service offered by NIC in collaboration with Microsoft MSFT.
Additionally, NIC’s outdoor recreation platform is set to go live in Pennsylvania and Illinois in the first quarter of 2021.
The Zacks Consensus Estimate for 2020 earnings is pegged at $1.02 per share, having been revised 34.2% upward in the past 60 days. For 2021, the consensus mark for earnings has moved 13.2% north to $1.03 per share over the same time frame.
NIC Inc. Price, Consensus and EPS Surprise
NIC Inc. price-consensus-eps-surprise-chart | NIC Inc. Quote
CrowdStrike Holdings CRWD is benefiting from rising demand for cyber-security solutions amid several data breaches and the urgency for security and networking products, prompted by the COVID-19 pandemic-led remote working trend.
Moreover, continued digital transformation and cloud-migration strategies adopted by organizations are key drivers for this presently Zacks Rank #2 (Buy) company.
CrowdStrike’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps adding users.
Further, the company’s next-generation antivirus EDR and device-control products are well poised to gain from the thriving remote work culture.
The consensus mark for its 2020 bottom line is pegged at 22 cents per share, having been revised a whopping 266.7% upward in the past 60 days. For 2021, the consensus mark for earnings has moved 45.5% north to 32 cents per share over the same time frame.
CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise
CrowdStrike Holdings Inc. price-consensus-eps-surprise-chart | CrowdStrike Holdings Inc. Quote
Covetrus CVET is riding on strong coronavirus-led demand for online solutions in veterinarian practice. This presently Zacks #2 Ranked company is helping veterinarians expand their digital presence. Moreover, robust pet adoption and higher incremental spending on pet care bode well for the company.
Covetrus’ prospects in 2021 are likely to be driven by its solid prescription management business. The company’s investment in extending its pharmacy capacity and innovative solutions are major levers. Moreover, its improved financial condition allows it to invest in veterinary study groups, which is expected to boost customer relationship.
Moreover, the company plans to penetrate the markets of Australia and New Zealand in the second half of 2021 with its prescription management in the second half of 2021. This is expected to boost international growth. Further, cost-containment initiatives, as reflected by Covetrus’ exit from the low-margin distribution business in France, are expected to aid profitability.
The Zacks Consensus Estimate for its 2020 earnings stands at 85 cents per share, up 11.8% in the past 60 days. The consensus mark for its 2021 earnings is pegged at 91 cents per share, having moved 11% north over the same time frame.
Covetrus, Inc. Price and Consensus
Covetrus, Inc. price-consensus-chart | Covetrus, Inc. Quote
J2 Global’s JCOM advertising business has limited exposure to local, travel, food, automotive and industry verticals, which are largely affected by the coronavirus. This, in turn, is a positive for its overall business. Besides, the company’s healthy display business (almost 40% healthcare) is expected to steadily drive its top line.
Cloud Services is expected to benefit from the company’s growing privacy and corporate fax businesses. Moreover, the coronavirus-led work-from-home wave augurs well as J2 Global’s security, privacy and voice services are considered indispensable to a remote working set-up.
Further, J2 Global’s growth-by-acquisition policy holds promise. Strategic acquisitions expanded the company’s customer base, provided access to new markets and widened its product line-up. The latest RetailMeNot buyout is also expected to strengthen this presently Zacks Rank #2 company’s footprint in the affiliate commerce industry.
The consensus mark for 2020 bottom line is pegged at $7.92 per share, up 8.8% in the past 60 days. For 2021, the consensus mark for earnings has moved 15.1% north to $8.69 per share over the same time frame.
j2 Global, Inc. Price and Consensus
j2 Global, Inc. price-consensus-chart | j2 Global, Inc. Quote
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
j2 Global, Inc. (JCOM) : Free Stock Analysis Report
NIC Inc. (EGOV) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
CrowdStrike Holdings Inc. (CRWD) : Free Stock Analysis Report
Covetrus, Inc. (CVET) : Free Stock Analysis Report
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