In this article, we’ll take a look at the 10 most undervalued cloud stocks under $10, according to hedge funds. Go straight to see more such companies The 5 Most Undervalued Cloud Stocks Under $10 According To Hedge Funds,
Major cloud players in the market, including Microsoft Corp (NASDAQ:MSFT), are facing massive headwinds amid slowing demand and spending as companies cut expenses amid rising interest rates. Microsoft Corp (NASDAQ:MSFT) shares fell sharply in January after investment firm UBS highlighted some concerns related to the development of the company’s Azure cloud platform in a note. UBS said that Microsoft Azure is entering a growth deceleration phase that will worsen in FY23/FY24. UBS worried investors were worried that this growth slowdown could be related to growth maturity rather than the global macro environment.
The UBS note came after Microsoft Corp (NASDAQ:MSFT) gave soft guidance for Azure’s revenue growth. Interestingly, when Microsoft posted quarterly results — which showed Azure’s strong growth during the period — MongoDB Inc., Datadog Inc. And several cloud stocks jumped, including Snowflake. But later, these shares retreated as investors digested Microsoft’s weak guidance.
Microsoft Corp (NASDAQ:MSFT) isn’t the only company facing headwinds in the cloud industry. Major players in the market including Amazon and Google are facing a slowdown in growth. A Bloomberg report on February 8 said that growth rates for each of the three market leaders in the cloud industry — Amazon, Google and Microsoft — fell at least 10 percentage points over the past nine months. The report also cites Rickin Shah, founder and CEO of Slower.ai, who thinks growth is slowing because companies are downsizing and trying to cut costs.
The report states that most cloud services charge customers based on usage. So, when times are tough, companies can easily cut cloud spending by reducing their usage. Some of the other important factors that are raising concerns for the growth of cloud companies are the rapid slowdown in some of the markets that were earlier major users of the industry. The report states that the slowdown in the crypto market and mortgage lending industry is having a negative impact on the growth in the cloud industry.
But just because the market leader in the industry is experiencing a downturn doesn’t mean the broader cloud industry is on the decline. In fact, the opposite is true. The cloud industry is growing rapidly as small businesses continue to migrate to cloud platforms to reduce their costs and increase performance. A research report estimates that the global cloud computing market is expected to grow at a CAGR of 15% over the forecast period 2023-2028 and reach $810 billion in value by 2026.
Image by Sergey Tokmakov Terms. law from pixabay
That’s why in this article, we’ve decided to focus on smaller cloud stocks that have the potential to be long-term growth catalysts.
our methodology
For this article, we scanned Insider Monkey’s database of 920 hedge fund holdings and picked the top 10 cloud computing stocks that are trading below $10 and have forward PE ratios lower than the software industry PE ratios as of February 9. Some of these stocks have high PE ratio but their shares have declined in last 12 months and they are undervalued based on their long term growth catalysts which we have mentioned in their respective paragraphs.
Most Undervalued Cloud Stocks Under $10 According to Hedge Funds
10. IntelliCheck, Inc. (NASDAQ:idn,
Number of hedge funds: 5
Intellicheck, Inc. (NASDAQ: IDN) is an identity verification company. Intellicheck, Inc. (NASDAQ: IDN) also provides cloud-based identity services and related solutions to protect customer data in the cloud. Intellicheck, Inc. (NASDAQ: IDN) has gained nearly 40% year-to-date through February 9, but shares are down nearly 25% over the past 12 months.
Analysts believe that Intellicheck, Inc. (NASDAQ: IDN) valuation is low and could rise in the future as the company moves toward a SaaS-based revenue model. It operates in the identity verification market whose value is expected to reach $34 billion by 2030.
Intellicheck, Inc. (NASDAQ: IDN) beat EPS estimates for the third quarter. It ended the quarter with cash and equivalents of $11.8 million and no debt.
By the end of the third quarter of 2022, 5 of the 920 hedge funds tracked by Insider Monkey have acquired Intellicheck, Inc. (NASDAQ: IDN) reported its stake. Nantahala Capital Management of Wilmot B. Harkey and Daniel Mack has acquired Intellicheck, Inc. (NASDAQ: IDN) worth $314,000.
9. Smith Micro Software, Inc. (NASDAQ:SMSI,
Number of hedge funds: 6
Smith Micro Software, Inc. (NASDAQ: SMSI) is a software company best known for CommSuite® Cloud, its cloud platform that helps people manage their voice and text messages. Smith Micro Software, Inc. (NASDAQ: SMSI) has had an impressive 2023 performance but is still down nearly 23% over the past 12 months. Analysts believe that Smith Micro Software, Inc. (NASDAQ: SMSI) is undervalued as the company’s position continues to strengthen in the digital family lifestyle solutions domain. Smith Micro Software, Inc. (NASDAQ: SMSI) acquired Circle Media’s carrier business and secured contracts with giants such as T-Mobile in the US and Sky in the UK. Smith Micro Software, Inc. (NASDAQ: SMSI) also bought the Avast Family Safety business and secured additional contracts with Verizon, AT&T and Wind Tre, a property of Hutchison, in Italy.
From these partnerships, Smith Micro Software, Inc. (NASDAQ: SMSI) to develop an ecosystem of products and services and tap into the lucrative market of the Internet of Things and the connected home.
A total of 6 hedge funds tracked by Insider Monkey have shorted Smith Micro Software, Inc. at the end of the third quarter of 2022. (NASDAQ: SMSI) reported the stake.
8. Assure Software, Inc. (NASDAQ:asura,
Number of hedge funds: 7
Assure Software, Inc. (Nasdaq: ASUR) is a SaaS company providing payroll, attendance, tax and human resources solutions to businesses. Assure Software, Inc. (Nasdaq: ASSURE) is known for its human capital management suite, named Assure HCM, which offers cloud-based payroll, tax services, and time and attendance software, as well as HR services ranging from small projects to full HR outsourcing. provides services. Payroll and HR staff. In the third quarter, Assure Software, Inc. (NASDAQ:ASUR)’s adjusted EPS came in at -$0.01, beating estimates by $0.03. Revenue in the quarter increased 21.8% year-over-year to $21.9 million, topping estimates by $0.69 million.
Assure Software, Inc. (Nasdaq: ASUR) has posted solid growth in 2020 and 2022 in terms of revenue and adjusted EBITD.
Assure Software, Inc. has a total of 7 hedge funds in Insider Monkey’s hedge funds database. (Nasdaq: ASUR) holds a stake. The total value of these shares was around $33 million. Assure Software, Inc. (NASDAQ:ASUR)’s largest stakeholder, Greg J. Powers had Private Capital Management, which had a $20 million stake in the firm.
7. Rackspace Technology, Inc. (NASDAQ:rxt,
Number of hedge funds: 10
Rackspace Technology, Inc. (NASDAQ: RXT) is a notable cloud infrastructure company based in Texas. Rackspace Technology, Inc. (NASDAQ:RXT) has posted gains of nearly 7% year to date through February 9. In November, Rackspace Technology, Inc. (NASDAQ:RXT) gained a whopping 28% after the company posted strong Q3 results that beat estimates. , Rackspace Technology, Inc. (NASDAQ: RXT) said its adjusted EPS for the quarter came in at $0.10, beating estimates by $0.01. Revenue for the quarter jumped 3.2% to total $787.6 million, topping estimates by $14.67 million. Cost revenue increased 5% in the period to reach $751 million. For the fourth quarter, Rackspace Technology, Inc. (NASDAQ: RXT) said it expects revenue to come in between $772 million and $782 million, versus the consensus estimate of $781.17 million. Adjusted EPS for the quarter is estimated to be in the range of $0.04 to $0.06, versus the consensus estimate of $0.07.
However, Rackspace Technology, Inc. (NASDAQ:RXT) is in the news these days for a negative reason as well. (NASDAQ: RXT) customers were affected by a ransomware attack on the company’s hosted email service in December.
6. Upland Software, Inc. (NASDAQ:upld,
Number of hedge funds: 12
Upland Software, Inc. (NASDAQ: UPLD) is a Texas-based software company that provides a number of cloud-based software solutions. Upland Software, Inc. (NASDAQ: UPLD) cloud products include Intelligent Capture, a document capture software with cloud-based routing and fax features; Interfax, a cloud-based fax services; and Simple, a cloud expense and inventory management system.
By the end of the third quarter of 2022, 12 hedge funds tracked by Insider Monkey will own Upland Software, Inc. (NASDAQ: UPLD) reported the stake. The net worth of these shares was around $31 million. During this period Upland Software, Inc. (NASDAQ: UPLD)’s largest stakeholder was Claus Möller P2 Capital Partners Which has a stake of $7.7 million in the company. Upland Software, Inc. (NASDAQ: UPLD) was Israel Englanders Millennium Management with a stake of $5.6 million.
In its 2022 Fourth Quarter Investor Letter, Bernzot Capital Advisors reports Upland Software, Inc. (NASDAQ: UPLD) made the following comments regarding:
,Upland Software, Inc. (NASDAQ: UPLD): The company’s promising attempt to expand its go-to-market approach failed, and organic growth disappointed. Margins were eroded by additional expenses and the timeline for achieving margin targets became unclear. This uncertainty coupled with the unexpected capital increase prompted us to sell.
Click to continue reading and watch The 5 Most Undervalued Cloud Stocks Under $10 According To Hedge Funds,
Suggested Articles:
Disclosure: none. The 10 Most Undervalued Cloud Stocks Under $10 According To Hedge Funds Originally published on Insider Monkey.
Source: finance.yahoo.com
