The COVID-19 pandemic has given a significant boost to the performance of the work-from-home industry, which was booming well before 2020. While many employees resumed working from their offices this year after solid progress on the COVID-19 vaccination front, with the advent of a new, highly-contagious variant, omicron, many household name companies, such as  Alphabet Inc. (GOOGL), have postponed their return-to-office plans. Also, Okta CEO Todd McKinnon recently asserted that  “hybrid work will become more of the norm.” This is expected to drive the work-from-home industry’s growth.

According to a Small Business TRENDS report, 36.2 million Americans are expected to work remotely by 2025. Furthermore, 85% of Americans are estimated to enquire about remote/hybrid options before applying for jobs.

Given this backdrop, we think work-from-home stocks Broadcom Inc. (AVGO), Workday, Inc. (WDAY), and VMware, Inc. (VMW) could be solid picks now. The Direxion Work From Home ETF (WFH), which has returned 110.8% year-to-date, holds these three  stocks.

Broadcom Inc. (AVGO)

AVGO in San Jose, Calif., develops and supplies semiconductor infrastructure software solutions. It operates through two segments: Semiconductor Solutions and Infrastructure Software. Its category-leading product portfolio serves many critical markets. As of October 31, 2021, AVGO’s weighting in the Direxion Work From Home ETF was 2.7%.

On November 8, 2021, AVGO announced the launch of its 100G/lane optical PAM-4 DSP PHY families with an integrated trans-impedance amplifier and laser driver, the Jesko BCM8741x and Gemara BCM8781x. Vijay Janapaty, vice president and general manager of the Physical Layer Products Division at AVGO, said, “Broadcom’s innovative and highly integrated optical DSPs drive industry-leading optical module solutions that meet the roadmap needs of our hyper-scale cloud customers.”

AVGO’s non-GAAP net revenue increased 16.4% year-over-year to $6.78 billion for its fiscal third quarter, ended August 1, 2021. The company’s non-GAAP net income increased 28.3% year-over-year to $3.12 billion. Also, its non-GAAP EPS came in at $6.96, up 28.9% year-over-year.

Analysts expect AVGO’s revenue to increase 14.8% year-over-year to $27.41 billion in its fiscal 2021. Its EPS is expected to grow 26.1% year-over-year to $27.94 in the current year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 39.6% in price to close Friday’s trading session at $558.12.

AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

AVGO has an A grade for Momentum and a B grade for Growth, Quality, Sentiment, and Stability. Within the A-rated Semiconductor & Wireless Chip industry, it is ranked #1 of 100 stocks. Click here to see the additional POWR Rating for Value for AVGO.

Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in AVGO for a 25% gain. Learn more about the RTR service here.

Click here to checkout our Semiconductor Industry Report for 2021

Workday, Inc. (WDAY)

WDAY provides enterprise cloud applications. Its offerings include financial management applications, cloud spend management solutions, and Workday applications for planning. As of October 31, 2021, WDAY’s weighting in WFH was 2.7%. WDAY is headquartered in Pleasanton, Calif.

On November 18, 2021, WDAY entered a definitive agreement to acquire VNDLY. Pete Schlampp, chief strategy officer, Workday, said, “VNDLY is at the forefront of the vendor management industry with an innovative and intuitive approach. The powerful combination of our technologies and talent will help customers better manage their evolving workforce dynamics, helping them keep pace with today’s changing world of work.”

WDAY’s subscription services increased 21% year-over-year to $1.17 billion for its  fiscal third quarter, ended October 31, 2021. Its total revenues increased 20% from last year to $1.33 billion. Its net income came in at $43.41 million, compared to a $24.34 million loss in the year-ago period. Also, its EPS came in at $0.17, compared to a $0.10 loss in the previous period.

For its fiscal year 2023, analysts expect WDAY’s revenue to be $6.13 billion, representing a 19.5% year-over-year rise. In addition, the company’s EPS is expected to increase 33.4% year-over-year to $3.91 in fiscal 2022. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 19.1% in price to close Friday’s trading session at $266.99.

WDAY has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Growth and a B grade for Sentiment and Quality. Within the Software – Application industry, it is ranked #16 of 169 stocks. Click here to see the additional POWR Ratings for Value, Momentum, and Stability for WDAY.

VMware, Inc. (VMW)

VMW in Palo Alto, Calif., provides software in hybrid and multi-cloud, modern applications, networking, security, and digital workspaces internationally. It offers several VMware multi-cloud solutions. As of October 31, 2021, VMW’s weighting in WFH was 2.6%.

On November 24, 2021, VMW announced a partnership with Mitacs and launched its Digital Equity Grid Innovation initiative, also known as TETRA, which aims to advance applied research to pave a sustainable path for 6G. Kit Colbert, CTO, VMware, said, “Our partnership with Mitacs aims to drive this advancement forward, keeping sustainability and digital equity at the heart of our work.”

VMW’s total revenue came in at $3.19 billion for its  fiscal 2022 third quarter, ended October 29, 2021, up 11.3% year-over-year. Its non-GAAP net income increased 3% year-over-year to $725 million. Its non-GAAP EPS came in at $1.72, up 3.6% year-over-year.

VMW’s revenue is expected to increase 9.1% year-over-year to $12.84 billion in its fiscal 2022. Its EPS is expected to increase 1.1% to $7.28 in the next year. It surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 4.4% in price since hitting its 52-week low of $113.87 on December 2, 2021, to close Friday’s trading session at $118.86.

VMW has an overall B rating, representing a Buy in our POWR Ratings system. It has a B grade for Value, Sentiment, and Quality. Within the Software – Business industry, it is ranked #5 of 59. Click here to view the additional ratings for VMW (Growth, Momentum, and Stability).

AVGO shares were trading at $563.25 per share on Monday morning, up $5.13 (+0.92%). Year-to-date, AVGO has gained 31.62%, versus a 23.53% 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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