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.
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.
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.
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.
Smartsheethas 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.
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.
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.
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.
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.
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.
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.
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!
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.