The popularity of the Software-as-a-Service (SaaS) model has grown exponentially over the years, with organizations seeking increased flexibility, reduced costs and time, among other benefits. SaaS has seen increased adoption, due to the advantages that SaaS offers over conventional software applications which have also led to its increased adoption.
With SaaS, companies can simply opt for a relevant subscription model and start operating without having to install expensive software on their end, since it is provided by the vendors through the cloud platform. Demand for SaaS continues to soar and according to one BMC software article, a study found that 99% of organizations will use one or more SaaS solutions by the end of 2021.
The article further stated that about 78% of small businesses “have already invested in SaaS options.” This is because small businesses have a limited budget, especially when starting out, which makes installing and configuring traditional software expensive and time consuming. Therefore, they find it more practical to opt for SaaS solutions.
As their needs change, companies can use more SaaS solutions by simply switching to the new offerings. Additionally, since software applications are provided by vendors, businesses do not have to worry about installing upgrades as they are supported by vendors.
Online collaboration has become the need of the hour as the pandemic has shifted organizations towards a remote working model. The adoption of SaaS has made this much easier, as employees can access cloud-based applications from anywhere and from devices such as smartphones, laptops, desktops, etc., to using an Internet connection.
Reflecting the demand for cloud computing, which includes SaaS, Gartner predicted in a report released on August 2 that by the end of 2021, global end-user spending on public cloud services is expected to reach. reach $ 396 billion. This will represent an increase from $ 313.853 billion in 2020 and spending is also expected to increase by 21.7% to reach $ 482 billion in 2022. The report further states that by 2026, public cloud spending is expected to increase. exceed 45% of all business IT spending, up from less than 17% in 2021.
Gartner expects spending on cloud or SaaS application services to reach $ 145.509 billion this year, from $ 120.686 billion in 2020, and reach $ 171.915 billion in 2022. According to a separate report from Research and Markets , the global SaaS market is expected to experience a CAGR of 12.5% from 2021 to 2025, as mentioned in a Business Wire article.
4 stocks to buy now
SaaS adoption looks set to grow as businesses continue to migrate to the cloud, due to its many benefits like scalability, lower costs, and more. So now is the right time to invest in companies with solid fundamentals that can make the most of this continued recovery. We have selected four of these stocks that carry a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
Paycom Software, Inc. PAYC provides a cloud-based human capital management solution delivered as SaaS for small and medium businesses in the United States.
Paycom shares are up 7% year-to-date and it currently boasts a Zacks Rank # 1. Zacks’ consensus estimate for current year earnings has risen 3.5% in the past 60 days. The company’s expected profit growth rate for the current year is 25.8%.
The Commercial Office, Inc. TTD operates a cloud-based self-service platform that enables buyers to create, manage and optimize data-driven digital advertising campaigns in various advertising formats and channels. On June 16, the company launched its services in India, enabling Indian digital marketers to realize the full potential of the open Internet.
Shares of this company Zacks Rank # 2 have risen 13.8% in the past three months. Zacks’ consensus estimate for current year earnings has risen 21.9% in the past 60 days. The company’s expected profit growth rate for the current year is 13%.
Microsoft Corporation MSFT offers Microsoft 365 which is the productivity cloud that offers Office applications, intelligent cloud services and advanced security. The company also offers its cloud platform, namely Azure.
Microsoft shares have gained 32.3% year-to-date. Zacks’ consensus estimate for current year earnings has risen 3.6% in the past 60 days. The expected profit growth rate of this Zacks Rank # 2 company for the current year is 8%.
Nutanix, Inc. NTNX develops and delivers an enterprise cloud platform and offers Calm SaaS, an out-of-the-box, fully managed automation software that helps automate IT services and make services available in a secure and easy-to-use package.
Shares of Zacks Rank # 2 Nutanix are up 27.3% year-to-date. Zacks’ consensus estimate for current year earnings has improved 21% in the past 60 days. The company’s expected profit growth rate for the current year is 26.4%.
5 actions in the process of doubling
Each was selected by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2021. Previous recommendations climbed + 143.0%, + 175.9%, + 498.3% and + 673.0%.
Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.
Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report