The “stay-at-home” economy may now be winding down. Between lockdowns ending in many states and Wall Street pricing in a recovery, the novel coronavirus is fast entering the rearview mirror. But that doesn’t mean bad news for many “work-from-home” stocks that saw a tailwind from the pandemic.
Why? We may be “returning to normal,” but the working-from-home trend isn’t going anywhere. Businesses are starting to see the many benefits of a remote workforce. And not just the obvious cost-savings. It may also be a means to boost morale and productivity, helping to maintain talent and reduce turnover.
Granted, this doesn’t mean all office workers will soon trade in their commutes and water-cooler talk for Zoom (NASDAQ:ZM) and virtual happy hours. However, recent events do demonstrate how the future of employment may be a more flexible, remote experience.
With this in mind, many work-from-home stocks that performed well during the pandemic could still continue to climb to higher prices.
Sifting through the many remote work stocks out there, these five come to mind as some that could keep on thriving:
- Atlassian Corporation Plc (NASDAQ:TEAM)
- DocuSign (NASDAQ:DOCU)
- Dropbox (NASDAQ:DBX)
- Microsoft (NASDAQ:MSFT)
- Slack (NYSE:WORK)
Let’s dive in, and see why these five names could climb higher even after the outbreak fades away.
Atlassian Corporation Plc (TEAM)
When talking about remote working, the first thing that may come to mind is videoconferencing. Collaboration software may be the largest beneficiary of work-from-home trends. In short, that means strong prospects for this provider of project management and collaboration SaaS solutions like Jira, Confluence, and Trello.
Remote work trends may not be the only catalyst for this stock going forward. As our own Louis Navellier discussed back in February, the rise of 5G could also boost TEAM stock over the long-term.
Granted, Wall Street is well aware of this company’s long runway and solid prospects. Shares sell for a forward price-to-earnings (P/E) ratio of 158.2. Even for a SaaS play, that’s a premium valuation! A rich multiple hasn’t scared off analysts like Citigroup’s Walter Pritchard.
In May, the analyst gave shares a “buy” rating, listing them as one of many collaboration stocks that could head higher as remote work trends accelerate. The key factor to consider, in Pritchard’s opinion, is the company’s ability to “go deep.” That is to say, increase revenue by user as opposed to merely expanding their user base. As he put it, this “points to sustainable growth efficiency.” In short, continued revenue growth and margin expansion.
Shares have pulled back in recent days from their all-time high of $191.72 per share. But with its catalysts still in motion, TEAM stock could be a buy at today’s prices.
DOCU is another SaaS name that has been “too hot to touch” as of late. Take a look at its recent stock chart, and you’ll see how shares have gone parabolic. The e-signature solutions provider is another beneficiary of a paperless, “work-from-home” world.
As seen from their strong earnings results released earlier this month, you can see why analysts like Wedbush’s Dan Ives remain highly bullish on DOCU stock. Don’t take the company’s massive revenue growth (59% from the prior years’ quarter) to be just a coronavirus tailwind. In Ives’ view, the growing work-from-home trend means continued strong results going forward for the company.
Again, like some of the other stocks discussed in this article, valuation may be a concern. A forward P/E of 291.2 is by no means cheap. Shares have also dipped from their all-time high set earlier this month. This could mean an additional pullback may be in the cards.
The said pullback may be a prime buying opportunity for TEAM stock. As a tremendous growth runway remains at play, this is another work-from-home name that could thrive in the “new normal.”
This collaboration SaaS name is yet another way to play remote working trends. As InvestorPlace’s Laura Hoy wrote May 28, the company is fast becoming a “one-stop-shop” for collaboration solutions. Also, given their small size relative to their larger peers, the company itself could be gobbled up by a larger player. In short, investors could win, whether the company scales into a larger enterprise, or if it gets acquired at a substantial premium to today’s prices.
Adding to this is potential activist involvement in DBX stock. I wouldn’t buy this work-from-home stock on takeover and shareholder activism rumors alone. Given shares still trade below past highs, the company’s management may not be so keen on cashing out just yet.
Valuation-wise, shares look dirt cheap compared to other SaaS names out there. But a forward P/E of 30.1 isn’t exactly deep value territory. Add in estimated revenue growth of just 11.6% between this fiscal year and the next, and this company still has a lot to prove before shares climb back to higher prices.
Granted, not a slam-dunk growth opportunity, but still a name to consider as work-from home trends continue.
Given its massive size, the rise of remote work isn’t exactly going to cause this software giant’s shares to double anytime soon. But, the success of the company’s Office 365 and Teams platforms could help fuel continued growth.
Fast gaining critical mass, the Teams collaboration platform could be giving rivals Slack and Zoom a run for their money. Considering the synergy between the company’s cloud-based platforms and their Azure cloud computing business, this recent success gives them an additional edge, as they duke it out with Amazon’s (NASDAQ:AMZN) AWS for market share.
MSFT stock is not only a remote work and cloud play. As a high-quality stock, shares could hold up well if markets pull back from their recent rally. Wall Street may be pricing-in a V-shaped recovery, yet uncertainty continues to linger beneath the surface.
A solid combination of growth stock and defensive stock, Microsoft remains a strong buy for many reasons. With Teams as its work-from-home catalyst, consider this another name that could thrive in a changing work enviornment.
This company’s collaboration platform has become ubiquitous in the world of remote work. In recent days, Wall Street has cooled off on this previously too-hot-to-touch collaboration play. Shares took a big tumble June 5, as recent results cast doubt over whether Slack can live up to investors’ high expectations.
With the runaway success of Microsoft’s Teams, the company could continue to disappoint in the coming quarters. But, this alone doesn’t mean its time to bail on WORK stock. Revenues last quarter grew a staggering 50% from the prior years’ quarter. Guidance calls for full year revenues to grow between 36% and 38% year-over-year.
In short, Slack is no slouch when it comes to growth. The company’s platform could make it an enticing bolt-on acquisition for a software name looking to challenge Microsoft and other major collaboration SaaS players.
With Wall Street falling out of the love with WORK stock, it may not be wise to dive in today. But, if shares continue to fall back to prior price levels (between $20 and $25 per share), this work-from-home stock could be a strong buying opportunity.
Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.