Make a Killing on This Next Cloud King
Today’s stock is a good example of another one of my favorite strategies—investing in “venture capital” stocks. There are the stocks of small, emerging firms that provide solutions to a number of businesses in different industries. These solutions become indispensable to customers just because they address the real pain points and help the customers grow. These venture capital stocks have the potential to multiply many times over as they continue to attract more customers and expand their market share.
The case in point being HubSpot Inc (NYSE:HUBS), which provides a cloud-based marketing and sales software platform to businesses in industries like financial services, healthcare, and manufacturing. HubSpot’s platform features integrated applications to help businesses attract visitors to their websites, convert visitors into leads, and close leads into customers. In the fast-changing technology landscape where customers are no longer buying the old-fashioned way, it is imperative that businesses transform how they attract, engage, and delight their customers. HubSpot Inc helps businesses in achieving this goal.
I am bullish on HUBS stock for the following reasons.
HubSpot is levered to cloud computing technology, which shall continue to grow for the coming decades. The company helps businesses attract customers as the traditional sales and marketing techniques no longer work in the digital world. HubSpot Inc has one of the best inbound marketing platforms, and with over 30,000 clients all over the world, things are only going to get better in the coming years.
As per the latest research report by Gartner, Inc., the worldwide public cloud services market will be almost $250.0 billion, and is likely to grow 18% in 2017. This is because more and more companies are shifting to cloud services to scale their businesses, control their costs, and become more agile. (Source: “Gartner says Worldwide Public Cloud Services Market to Grow 18 Percent in 2017,” Gartner, Inc., February 22, 2017.)
|Cloud Business Process Services (BPaaS)||40,812||43,772||47,556||51,652||56,176|
|Cloud Application Infrastructure Services (PaaS)||7,169||8,851||10,616||12,580||14,798|
|Cloud Application Services (SaaS)||38,567||46,331||55,143||64,870||75,734|
|Cloud Management and Security Services||7,150||8,768||10,427||12,159||14,004|
|Cloud System Infrastructure Services (IaaS)||25,290||34,603||45,559||57,897||71,552|
HubSpot is in a perfect position to profit from this rise in the cloud adoption trend as companies try to lower their costs and aim to understand their customers better. The company provides application software for businesses to help automate their marketing and social media, making their marketing campaigns more effective.
With companies looking for a platform for growth, HubSpot is in the right place at the right time. Its lower customer acquisition cost coupled with the ability to retain customers shall keep HubSpot stock flying high for a long time.
The company has been delighting on the earnings front as well. HubSpot stock surged almost 10% when the company posted upbeat Q1 earnings last month and issued higher forecast. Revenue for the quarter increased by 40% year-over-year, to touch $82.3 million. HubSpot reported earnings per share of $0.03, in contrast to the general consensus of negative earnings. (Source: “HubSpot Reports Q1 2017 Results,” HubSpot Inc, May 2, 2017.)
Brian Halligan, the CEO of HubSpot, said that the strong growth in revenue and improved operating leverage are an indicator of how well customers connect with the firm’s products.
Chart courtesy of StockCharts.com
HubSpot stock has rallied over 50% in the year to date and has gone up by about 145% in the last five years. Over the last one year, HUBS stock has gained almost 45% as compared to the S&P 500 index, which went up by about 16% in the same time period. With the current popularity of HubSpot Inc’s products, the stock has the potential to earn big returns for its investors.
The Bottom Line on HUBS Stock
HubSpot stock is one of the best venture capital plays on the ever rising cloud trend. The company’s go-to-market model matches the way companies sell to the way people actually want to shop and buy, and this is something businesses want the most.
The success and efficiency of HubSpot’s cloud solutions is evident in the rising number of customers that have adopted both its marketing and sales products. The number of total customers increased to 31,262 at March this year, which is a 40% year-over-year growth and is a strong indicator of the popularity of the company’s cloud solutions. (Source: Ibid.)
Investors could follow this venture capital strategy to grow their money by triple digits and use the dips to add to positions in HUBS stock.