Barron’s stay-at-home stock list looks behind Internet scenes (NASDAQ:ZM)
In its look at "overlooked" stay-at-home stocks, Barron's focuses toward behind-the-scenes technology - more so than Zoom (NASDAQ:ZM), which it acknowledges has become the "poster child" for the home-work economy.
"Yes, Zoom has become a verb. It's also become an absurdly expensive company," Eric Savitz says, noting its market value of about $42B is some 45 times this year's estimated sales.
He instead points to content delivery networks, document storage and unified communications.
CDNs (which balance and secure Internet traffic loads) are critical to a smooth Net, and its biggest player, Akamai (NASDAQ:AKAM), has a modest valuation compared to Zoom (at 6x estimated revenue) and a 30% jump in traffic from February to March. Recent CDN sector addition Cloudflare (NYSE:NET) is also addressing the activity spike and has recently hit a new high.
And document storage companies - notably Box (NYSE:BOX) and Dropbox (NASDAQ:DBX) - have been ignored in the rush to find the right stay-at-home basket, he writes.
Rivals to RingCentral (NYSE:RNG), including Vonage (NASDAQ:VG) and 8x8 (NYSE:EGHT), are pushing hard on their video services, and they don't yet have Zoom-like valuations, he says (Vonage is set to have more total revenue than Zoom, from a company at one-twentieth the market valuation).
And the big overlap among all the stay-at-home stock lists is Netflix (NASDAQ:NFLX) - currently at all-time highs, but headed on Tuesday toward perhaps its most scrutinized earnings report ever. Eyes will be on whether international demand remains strong, and any hints toward new content or any hit from new competition.
Gloss