Cloud stocks had a great year. What will 2018 bring? Given the setup we see on the charts we see a select group of cloud stocks that could outperform their peers in 2018.
The fundamental case for cloud stocks / cloud companies
We often hear this proverbial “Knowledge is Power.” It seems to be established in our minds. We tend to differ though. Knowledge such as facts, information, statistics are neither powerful nor profitable if they are not recorded or stored for future reference. The building of Giza Pyramid was an excellent example which makes the case that knowledge vanished with absolutely no trace for future reference nor next generations.
Over time, humans realized the important of recording the knowledge that they build up. In the prehistoric era data was carved on stones, tree trunks, or leaves. In the modern era we have data written down on paper followed by storing data in vinyl record, tape, diskette, CD, hard disk, and now servers. The historic trend is quite obvious. The enormous amount of accumulated data will require exponential amount of storage as time progresses. Without any doubt is the capability of providing storage one of the most lucrative businesses. There are also some companies that specialize in developing platforms that provide cloud-based integrated video surveillance. Check out Arcules website for details.
Leading cloud stocks in 2018, and which ones to buy
InvestingHaven’s research team sees a potential investment opportunity in the cloud industry in 2018 particularly in the next phase of cloud solutions. Amazon, Google, Microsoft and IBM may have been the clear winners so far. But there still is a handful of cloud stocks with huge market potential. We have identified 4 cloud stocks that deserve a buy rating in 2018.
Cloud stock 2018 #1: Cisco System (CSCO)
Ever since the dotcom bubble Cisco’s stock price has been consolidating between 11 – 30 dollar for the past 17 years. And it managed to break the 34 mark in Oct. Cisco has its roots in networking hardware. It was not bullish in the last years, so what makes us there is a bullish case for this stock?
When the stock price broke long term horizontal resistance it was a major event especially as Cisco paid 1.9 Billion into cloud business. Yes, there is no 100% guarantee that it will be a success but the commitment of the market to push this stock price higher is certainly present. We project that price can hit 50 by 2018. The former top of 81 could be tested after 2018. We do not exclude an unexpected swift plunge to around 34 on its way up.
Cloud stock 2018 #2: Hewlett Packard Enterprise (HPE)
The spin-off from HP into HPE allows the company to focus on its cloud business. The weekly chart of HPE shows that price started consolidating in Aug 2016. Since then there were 2 failed breakout attempts at the 15 dollar mark. Price is currently in the process of another breakout attempt. Our 2018 price target is ~27 if price can break 15.05 convincingly. The bearish scenario sits below 12.80, around 10.70, where major support sits in case of a market crash.
Cloud stock 2018 #3: Attunity Ltd (ATTU)
Attunity is a data integration company that can transfer data between a variety of heterogeneous environments
The inverted head and shoulder pattern would materialize on this monthly chart once this stock crosses $14.5. Our conservative 2018 price target is ~14.5 while our optimistic price target is ~25. As this is a high beta stock there is a bearish scenario that would bring this stock down to 6.5, where important support sits, and which also makes for a great entry point.
Cloud stock 2018 #4: Acxiom Corporation (ACXM)
The monthly chart of Acxiom Corporation has a huge consolidation zone over the last 23 years (since 1994). The upside target for 2018 will definitely be ~40 – 45, and it will act as major resistance zone. Breaking out could lead this stock to ~70. The breakdown zone will be ~19.5 – 22.
[Ed. note: The author of this article, Ralf Lai, as part of InvestingHaven’s research team, has a very strong capability in identifying future winners. He identified 7 China stocks to buy in 2018 to ride China’s bull market.]