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Best- And Worst-Performing Cloud Computing Stocks Of 2013

Jan 4 2014, 12:16pm CST | by

Best- And Worst-Performing Cloud Computing Stocks Of 2013
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The five highest performing cloud computing stocks year-to-date on the Cloud Computing Index are Qualys (NASDAQ: QYLS), Amazon (NASDAQ:AMZN), NetSuite (NYSE:N), Workday (NYSE:WDAY) and CA Technologies (NASDAQ: CA).

A $10K investment in Workday shares made on January 4th of last year is worth $15,802 as of market close yesterday, and $10K invested in Qualys shares are worth $15,421 for the same time period. Included in the comparison is the annualized gain or loss and total gain or loss of IBM, Microsoft, Oracle and SAP shares for the same time period.

Why Amazon Is Included In This Analysis

Amazon’s fastest growing business is Amazon Web Services (AWS), which posted a 56% year-over-year gain in revenues through Q3, 2013 based on an analysis of their financial statements available on the Amazon Investor Relations website.

There have been numerous analyses and market projections of how large and valuable AWS will be in the future.  Matt Asay’s analysis of AWS revenues, Amazon Web Services Worth $50 Billion By 2015, And That May Be Too Low provides insights into how Evercore Partners and Macquarie Capital are projecting revenues from AWS.  Below is the Macquarie Capital analysis:

Berstein Research’s report Amazon Web Services (AWS): Leading the Migration of the Datacenter to the Cloud published in April of last year provides the most detailed analysis of AWS financials today and in the future.  Here are a few take-aways from this excellent report:

  • AWS revenues could reach $20B from $1.8B in 2012, which is a conservative outlook, given the addressable market is in excess of $300B. Bernstein estimates that AWS enjoy gross margins that exceed 55%, with steady-state operating margins plausibly greater than 25%.  If Amazon can continue this pace of growth, Berstein projects their Return on Invested Capital (ROIC) will reach or exceed 20% by the end of the decade.  This puts AWS Capital Intensity at or near the top of the S&P 500 already:
  • With scalable operations, fixed and semi-fixed cost structures and continual global expansion, it is reasonable to expect AWS to be a $20B business by 2020.  This translates into a 30 to 35% Compound Annual Growth Rate (CAGR) in the time period.
  • Berstein Research estimates that 70% of AWS revenues are from Elastic Computing Cloud alone, followed by 13% from the Simple Storage Service (S3), with CloudFront contributing 2% and ancillary businesses providing 14% of revenues.  They also estimate the CAGR of feature adoption in the AWS customer base is well over 20% year over year, leading to a very high level of customer loyalty and standardization.

Please see the full Cloud Computing Index for market caps, average volumes, 52-week high and low share prices, Earnings per Share, Price/Earnings Ratio, and Beta.  I am using the Google Finance Portfolio option to track the performance of these stocks.  For information on how this index was created, see the description at the end of this post.  I do not hold equity positions or work for any of the companies mentioned in this blog post or included in the Cloud Computing Index and this post is not meant to provide investment advice.  It is simply a glimpse into the performance of these company’s stock prices over time.  Please click on the graphic to expand for easier reading.

Best Performing Cloud Computing Stocks, December 30 to January 3, 2014

Worst Performing Cloud Computing Stocks, December 30 to January 3, 2014

Best Performing Cloud Computing Stocks In 2013

Worst Performing Cloud Computing Stocks In 2013



Comparing Cumulative Stock Performance

Year-to-date performance of the Cloud Computing Index compared to NetSuite, Salesforce, IBM, Oracle and SAP is shown below. This index has been up 12.16% YTD, with NetSuite (NYSE:N) up 49.67%, Salesforce (NYSE:CRM) up 30.48%, IBM (NYSE:IBM) down 3.37%, Oracle (NYSE:ORCL) up 9.26% and SAP (NYSE:SAP) up 5.69%. Please click on the graphic to expand for easier reading.

Specifics on the Cloud Computing Stock Index

I used The Cloud Times 100 as the basis of the index, selecting nineteen companies all of which are publically traded.  The latest edition of the Cloud Computing Index is shown here.  The filter applied to these companies is that 50% or more of their revenues are generated from cloud-based applications, infrastructure and services.

Source: Forbes

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