The stock market is experiencing a sell-off on the likelihood that the Fed will hike interest rates aggressively this year and on rising geopolitical tensions. Because January inflation data has surpassed estimates, investors expect the Fed to be more aggressive with interest rate hikes this year. Rising tensions between the U.S. and Russia over Ukraine are adding to the concerns. However, a steady economic recovery is still considered significant support. The current market volatility is being treated as a temporary condition, and investors that hold on for a tad longer could secure solid returns.
The cloud computing industry is projected to achieve solid growth in the long term, with extended remote lifestyles driving demand. According to Report Linker, the global cloud computing market size is expected to grow at a 16.3% CAGR through 2026.
So, we think it could be wise to buy the price dip in lesser-known cloud stocks Altair Engineering Inc. (ALTR), Blackbaud, Inc. (BLKB), and Thryv Holdings, Inc. (THRY). They are well-positioned to witness a solid rebound.
Altair Engineering Inc. (ALTR)
ALTR in Troy, Mich., together with its subsidiaries, provides software and cloud solutions in simulation, high-performance computing, data analytics, and artificial intelligence worldwide. The company has two segments: Software and Client Engineering Services.
On Dec. 15, 2021, ALTR acquired World Programming, a U.K.-based technology company that specializes in data analytics software. James R. Scapa, founder and CEO, ALTR, said, “We believe World Programming’s solutions are highly advanced and proven to help customers compile and execute millions of models built using the SAS language, while embracing modern languages and open-source technologies, allowing them to respond faster to market demands and gain new insights.”
ALTR’s total revenue increased 14% year-over-year to $121.31 million for the third quarter, ended Sept. 30, 2021. The company’s non-GAAP net income came in at $9.64 million, up 107.1% year-over-year, while its non-GAAP EPS was$0.11, up 83.3% year-over-year. Moreover, its adjusted EBITDA increased 81.4% year-over-year to $14.83 million.
Analysts expect ALTR’s revenue to increase 10.1% to $571.42 million in 2022, and its EPS to increase 50.2% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock is currently trading 27% below its 52-week high of $82.96, which it hit on November 8, 2021.
ALTR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
ALTR has a B grade for Growth and Sentiment. In the Software – Business industry, it is ranked #13 of 58 stocks. Click here to see the additional POWR Ratings for Value, Momentum, Stability, and Quality for ALTR.
Blackbaud, Inc. (BLKB)
BLKB provides cloud software solutions to nonprofits, foundations, companies, education institutions, healthcare organizations, and other social good entities in the United States and internationally. BLKB is headquartered in Charleston, S.C.
On Jan. 3, 2022, BLKB acquired global social impact technology leader EVERFI. Mike Gianoni, president and CEO, BLKB, said, “Blackbaud and EVERFI will work together to realize a shared vision of measurable social impact through world-class technology.”
BLKB’s total revenue came in at $231.22 million for the third quarter, ended Sept. 30, 2021, up 7.5% year-over-year. Its non-GAAP net income came in at $37.87 million, up 6% year-over-year, and its non-GAAP EPS was $0.78, up 6.8% year-over-year.
For fiscal year 2022, BLKB’s revenue is expected to grow 8.2% year-over-year to $997.48 million. Its EPS is estimated to come in at $2.96 in 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.
BLKB is currently trading 23.7% below its 52-week high of $86.96, which it hit on November 8, 2021.
BLKB has an overall B rating, which equates to a Buy in our proprietary rating system. It has a B grade for Growth and Quality. BLKB is ranked #9 in the Software – Business industry. Click here to see the additional POWR Ratings for BLKB (Value, Momentum, Sentiment, and Stability).
Thryv Holdings, Inc. (THRY)
Dallas, Tex.-based THRY provides digital marketing solutions and cloud-based tools to small-to-medium-sized businesses (SMBs) in the United States. The company operates through three segments: SaaS (Software as a Service), Marketing Services, and Thryv International.
On Nov. 11, 2021, Joe Walsh, CEO, and president of THRY, said, “We are experiencing the modernization of the local economy with SMB’s beginning to embrace cloud technologies, and we see Thryv as leading the charge. This wave of adoption has propelled Thryv software to faster and faster growth.”
THRY’s revenue increased 23.7% year-over-year to $297.29 million in the third quarter, ended Sept. 30, 2021. Its SaaS revenue came in at $44.80 million, up 40.8% year-over-year. Also, its comprehensive income came in at $31.52 million, compared to a $145,000 loss in the previous period.
Analysts expect THRY’s revenue to be $961.35 million in 2022. Its EPS is expected to come in at $2.33 in 2022. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. The stock is currently trading 26.7% below its 52-week high of $42.99, which it hit on Jan.3, 2022.
THRY has an overall B rating, which indicates a Buy in our proprietary rating system. In addition, it has a B grade for Value. Within the Software – Business industry, it is ranked #12. Click here to see the additional POWR Ratings for Sentiment, Momentum, Growth, Quality, and Stability for THRY.
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ALTR shares were trading at $61.13 per share on Monday morning, up $0.55 (+0.91%). Year-to-date, ALTR has declined -20.94%, versus a -7.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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