When searching for the best stocks to buy, you always have to stay ahead of trends. Artificial intelligence, 5G, and big data will transform our technology ecosystem and are excellent investment themes.
Besides, megatrends will continue to do well regardless of recessions and economic turmoil. For all these reasons, loading up on stocks in these areas is vital to give your portfolio a much-needed edge.
If we hone in on big data in particular, you will see that 5G will power this area and provide it with an amazing impetus moving forward. This fifth-generation network will provide extensive gains and possibilities for data collection from various data sources due to higher speed and lower latency. Companies will be able to collect more data and analyze it more quickly than ever before.
The winners will be the ones that put the “big” in big data. With all that in mind, let’s take a deep dive on seven big data stocks that are doing well and stand to benefit immensely from 5G adoption:
- Teradata (NYSE:TDC)
- Tencent Holdings (OTCMKTS:TCEHY)
- Snowflake (NYSE:SNOW)
- Palantir Technologies (NYSE:PLTR)
- Hewlett Packard Enterprise (NYSE:HPE)
- Cloudera (NYSE:CLDR)
- Splunk Technology (NASDAQ:SPLK)
Big Data Stocks to Buy: Teradata (TDC)
Teradata stock has been on a tear as of late. In the last three months, shares of the hybrid cloud analytics software provider have grown 62.6%. It’s not difficult to see why.
Its main platform is Teradata Vantage. Users can connect multiple data sources using commercial and open-source technologies through the company’s hybrid cloud solution.
The company is one of the best performers in the space. TDC stock has beat Wall Street analysts’ consensus earnings estimates 10 times in the last 12 quarters. In the fourth quarter of 2020, adjusted earnings per share came in at 38 cents, handsomely beating consensus estimates by 53.2%. Revenue of $491 million also managed to beat analysts’ estimate of $475.5 million.
Perhaps the most interesting tidbit from the earnings report was that annual recurring revenue for public cloud-based services jumped to $106 million, a 165% year-over-year increase.
It’s the result of the pivot to research and development in the cloud, led by CEO Steve McMillan. The executive explained that the company changed the dynamics of its spending to focus more on the cloud.
“We spend nearly $300 million on research and development every year, but previously only 30% was in cloud,” according to the chief executive.
“We flipped that around to have 70% of our investment in cloud and 30% on-premises. Moving that investment envelope has enabled us to put Teradata forward as a very relevant modern cloud platform for our customers.”
For me, TDC stock ticks all the boxes.
Tencent Holdings (TCEHY)
Tencent is a multinational technology conglomerate in every sense of the word. From entertainment to internet-related services and AI, the company has everything covered under the sun.
From a data perspective, it has the biggest social data in China. The company is working hard to integrate backend data from Qzone, Wechat, and other applications to create a holistic ecosystem that its users can exploit.
Much like other internet-focused companies, Tencent did very well during the latest crisis. For fiscal 2020, total revenues increased by 28% over 2019, and profit attributable to its equity holders rose 30% over the year-ago period.
Expect TCEHY stock to stay strong well into the year and beyond.
Founded in July 2012, Snowflake is a cloud computing-based data warehousing company with branding that touts “mobilizing the world’s data.”
Backed by salesforce (NYSE:CRM) and Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B), the company had the biggest software IPO last September. It ended up netting nearly $3.4 billion from the sale of 28 million shares, with SNOW stock ending its opening day up about 112%.
The excitement is warranted. Snowflake helps blue-chip companies analyze data and has seen healthy customer growth over the last few years. That made it one of the prized “unicorn” startups out there.
Seven months on, the big debate surrounding this company is valuation. Considering its blockbuster debut in September, most investors wanted to remain on the sidelines as they waited for shares to cool off.
Still, now that SNOW stock is down 19.7%, shares are trading at an attractive entry point.
Our next pick on this list of big data stocks to buy is a bit controversial. Palantir is a big data analytics software company with strong connections to the U.S. defense establishment.
Some of those relationships have led to strong criticisms by members of Congress. The company started operating with the Department of Homeland Security, the agency that oversees ICE, in 2011. Palantir has two current contracts with ICE worth a combined $92 million. One of the contracts concerns the agency’s Investigative Case Management (ICM) internal database, and the other is for its FALCON software.
However, if you are reading this and thinking the company is a one-trick pony, you shouldn’t. It has two software platforms, Gotham and Foundry. Gotham is for defense and intelligence agencies, and Foundry is for commercial customers.
Palantir has a nice sprinkling of customers from both government agencies and commercial companies. So, if you are worried about diversification with this one, PLTR stock has you covered. Besides, even though some investors may be peeved from the company’s close relationship with the defense establishment, I believe it provides stable, recurring cash flow, the stuff that any defense contractor’s — and investor’s — dreams are made of.
Hewlett Packard Enterprise (HPE)
The 2015 spin from then Hewlett-Packard, now HP (NYSE:HPQ), Hewlett Packard Enterprise is a business-focused organization with two divisions. One division focuses on consulting, networking, and support, and the other focuses on software and financial services. Considering the company’s asset-light nature, I believe it makes HPE stock a better long-term prospect than HPQ.
Refinitiv data shows the company beat Wall Street analysts’ consensus earnings estimates 10 times in the last 12 quarters. The only thing going against HPE stock is valuation. Shares are up 25.8% in the last three months, so, there is limited upside at the moment. Once shares cool off, this is a good one to have in your portfolio.
HPE stock is trading at 8.7 times forward price-to-earnings and offers a dividend yield of 3.1%, as of this writing.
Cloudera is a pure-play in the big data space. It offers an enterprise data cloud platform on the cloud or on-premises. You can leverage the platform for data engineering, data warehousing, machine learning, and analytics.
Founded in 2008, Cloudera is the brainchild of three engineers from Google, Yahoo!, Facebook (NASDAQ:FB), plus a former executive from Oracle (NYSE:ORCL). Much like the other stocks to buy on this list, Cloudera has been doing very well in the last several quarters. The analytics company beat expectations in the last 11 quarters out of 12, per CNBC data.
Looking ahead, Cloudera has provided muted guidance for fiscal year 2022. That has led to a small drop in price.
The underlying fundamentals are solid for CLDR stock, though. I would wait for the shares to cool off a bit more and then initiate a position. If you already have a position, then no need to panic. This is a buy-and-hold investment.
Splunk Technology (SPLK)
The final entry on our list of big data stocks to buy is a fun one. Splunk allows you to search, monitor, and interpret machine-generated big data through a Web-style interface. Using Splunk’s interface, an organization can identify data patterns and provide intelligence that the management can use in their decision-making process.
Splunk’s core offering gathers and analyzes high volumes of machine-generated data using a standard API to connect applications and devices directly. Much like the other constituents of this list, the company is a solid performer with excellent fundamentals.
The top line has grown 27.2% in the last five years, and the gross margin is an excellent 75.5%. Yes, this is an asset-light business, so it shouldn’t be surprising. But still, the positive momentum will only help as the company moves forward towards profitability.
SPLK stock is trading at 10.6 times price-to-sales. Since revenues are expected to grow 22.8% next year, I believe shares are a bargain since they have fallen 14% year-to-date, making it one of the best stocks to buy in the big data space.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.