Cloud stocks are still in vogue as the pandemic drags on. Even if we were to fully reopen, cloud stocks would likely continue to thrive as businesses continue to embrace the WFH (work from home) model along with remote work from other locations.

Working away from the office clearly heightens reliance on the cloud. Add in the fact that more businesses are chopping overhead costs by replacing in-house servers with the cloud and there is even more reason to consider the merits of cloud stocks.

 
Below, we provide a look at two of the more intriguing cloud stocks: Teradata Corporation (TDC) and Snowflake (SNOW).
 
Teradata Corporation (TDC)

TDC is one of the top hybrid cloud analytics software providers. TDC started as an enterprise database business and has since morphed into an enterprise analytics platform business. TDC was previously known as NCR Corporation. TDC strives to capture the business of companies that are large-scale data users.

TDC has an A grade in the Value component of the POWR Ratings along with a B grade in the Momentum component. If you are curious as to how TDC fares in the rest of the POWR Rating components ranging from Quality to Sentiment and Stability, you can find out by clicking here. Of the five stocks in the Technology – Storage space, TDC is ranked first. All in all, this industry is rated as a B. You can learn more about the stocks in the Technology – Storage space by clicking here.

The analysts believe TDC is overvalued as their average price target for the stock is $36.64. If TDC were to drop to this level, it would decline by more than 12%. However, the analysts’ high target for the stock is $70.

TDC has a forward P/E ratio of 25.59. This is a reasonable P/E for a tech stock so there is an argument to be made that a price of $41 per share is justified. At the moment, TDC is trading $19 below its 52-week high of $59.58.

TDC recently beat the Street’s earnings estimates even though its quarterly revenue is down 1% on a year over year basis. However, TDC’s recurring revenue is up nearly 10%. TDC’s adjusted earnings are up more than 70%. It appears as though TDC executives’ decision to pivot away from the licensing of software to cloud-based services provide through subscriptions is paying off.

Snowflake (SNOW)

SNOW provides cloud solutions along with database architecture, software, query optimization, and more. SNOW has a B grade in the momentum component of the POWR Ratings. However, SNOW also has a D grade in the Quality, Sentiment, and Stability components. You can learn more about SNOW’s performance in the remaining POWR Ratings components by clicking here.

Of the 79 publicly traded companies in the Technology – Services space, SNOW is ranked 77th. If you would like to learn more about this industry, click here.

The analysts are slightly bullish on SNOW, setting an average price target of $277.95. If SNOW reaches this level, it will have increased by nearly 3%. The analysts’ high target for the stock is $515. All in all, nearly two dozen analysts have performed a deep dive into SNOW.

SNOW’s revenue is up an impressive 118% every quarter. Customer growth is at 84%. Furthermore, SNOW customers who spend $1 million or more are up 110% every quarter. SNOW has 165 Fortune 500 companies as customers. SNOW’s cloud platform is revered by customers.

However, SNOW has more than doubled since debuting at $120, meaning there is the potential for a pullback if investors decide to take the profit off the table. Add in the fact that SNOW trades around 150 multiple of its sales and there is even more reason to be somewhat concerned.

Which Cloud Stock is Better?

TDC appears to be the better stock, largely because it has implemented a subscription-based could service. The word “subscription” should be music to your ears as people tend to “set and forget” subscriptions, letting the fees auto-charge without a second thought. Add in the fact that TDC has a lower forward P/E ratio along with better POWR Ratings and there is even more reason to favor it over SNOW.