During the bull run of the past decade, technology stocks led many investment portfolios higher. Most technology stocks posted remarkable comebacks since hitting 52-week lows in the novel coronavirus sell-off. The technology sector encompasses many high-growth businesses and one area that gets considerable attention is big data.
According to recent research led by Zeki Simsek of Clemson University, there are three dimensions to big data, i.e., “volume (the magnitude of data), variety (structural heterogeneity in a data set), and velocity (the rate at which data are generated and speed at which they are analyzed and used).” The research further highlights that “Big data is becoming an increasingly important business in which various actors not only control the databases but also regulate the marketing, sales, and use of such data and analytical capabilities.”
Many analysts agree the big data space will play a key part in the continued tech revolution. In other words, the oil or gold rush of past centuries is being replaced with big data rush.
Most of these companies focus on digital transformation and cloud migration. They work to make it easier for their customers to be found by their prospective clients. The Covid-19 pandemic is also helping accelerate the adoption of cloud-based tools.
With all that mind, here are three of the best big data stocks for long-term investors to buy:
Big Data Stocks: Cloudera (CLDR)
Palo Alto, California-based Cloudera’s data platform and software allow clients to engineer and warehouse data, as well as to engage in machine learning and multi-function data analytics. Machine learning, for example, uses systems to perform tasks without explicit instructions. The company deals with Hadoop, a way of compressing and processing very large data sets.
Clients include the Bank of England, Lufthansa (OTCMKTS:DLAKY), Deutsche Telekom (OTCMKTS:DTEGY), Morgan Stanley (NYSE:MS), and Navistar (NYSE:NAV), and the U.S. Census Bureau. The increasing number of business partners can provide an important tailwind for CLDR stock.
On June 3, Cloudera reported its Q1 financial earnings. Total revenue came at $210.5 million, an increase of 12% year-over-year. The results showed subscription revenue of $187.1 million, a YoY increase of 21%. Furthermore, Cloudera’s annualized recurring revenue grew 11% YoY. As of April 30, Cloudera’s cash and cash equivalents totaled $518.7 million.
“We believe that remote working environments have placed heightened importance on data, data analysis and data security, which has increased the value of data architecture design and the criticality of hybrid cloud solutions,” CEO Rob Bearden said.”
Cloudera is expected to publish its Q2 results in the coming days. Year-to-date, the share price is down 3%. If you are looking for a enterprise data cloud company to invest in for the long-term, CLDR stock should be on your watchlist.
Datadog (DDOG)
Monitoring and security platform Datadog went public in September 2019. Since then, DDOG stock more than doubled. The company monitors cloud applications by analyzing vast amounts of data and monitoring servers so customers can maximize performance and improve user experience. Datadog offers real-time bird’s eye insight into the client’s entire technology stack.
Datadog’s current customers come from a wide range of industries. They include Activision Blizzard (NASDAQ:ATVI), Cargill, DraftKings (NASDAQ:DKNG), Harvard Medical School and Peloton (NASDAQ:PTON).
In early May, Datadog released Q1 results. Quarterly revenue grew 87% YoY to $131 million. As of March 31, it served 960 customers with annual recurring revenue of $100,000 or more, an increase of 89% from 508 as of March 31, 2019.
CEO Olivier Pomel said, “We are very pleased with our first quarter performance… We continue to deliver innovation to our customers, including the recent launch of our Security Monitoring product, as well as surpassing over 400 supported integrations.”
Software-as-a-service company Datadog will report its second-quarter fiscal year 2020 financial results after the markets close on Aug. 6. For Q2, management is expecting revenue to be between $134 million and $136 million. Long-term investors may consider buying the dips in DDOG stock.
Splunk (SPLK)
San Francisco, California-based Splunk’s software allows businesses to analyze and interact with machine-generated big data through a website style interface. The company uses a cloud-based annual subscription model.
Some of their high profile long-term clients include Airbus (OTCPK:EADSY), Domino’s Pizza (NYSE:DPZ) and Intel (NASDAQ:INTC). This year, it gained several high profile clients including Expedia (NASDAQ:EXPE), Mount Sinai Health System, Take-Two Interactive (NASDAQ:TTWO) and TD Ameritrade (NASDAQ:AMTD).
On May 21, Splunk released its Q1 earnings report. Total revenue was $434 million, representing a YoY increase of 2%. Cloud revenue was $112 million, up 81% YoY.
CEO Doug Merritt remarked, “COVID-19 has transformed the world into one that requires rapidly accelerated digital transformation to keep organizations moving – we are seeing some resilient customers complete three-to-five year projects in just months. As customers continue to adapt to this new normal, data matters more than ever, evidenced by our continued strong momentum this quarter.”
The group is expected to report Q2 earnings report in the coming days. YTD, SPLK stock is up over 40%. Any dip below $200 makes the share price a better buy for long-term investors. UBS currently has a target price of $228.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, including a Ph.D. degree, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.
