Cloudflare: This high-flying growth stock makes cloud computing
"Brian Withers (NET): Cloudflare stock has been on a tear this year, up over 75%. While its fundamentals have improved, there's lots of excitement priced into this stock. Its price-to-sales (P/S) ratio is reaching a high-altitude, cirrus-cloud level of 77. But if the market pulls back in October, this is one you'll want to add to your portfolio. Let's find out why.
First, the recent top-line growth and customer numbers are top-notch. Second, the company is growing its addressable market by adding adjacent products. When the company went public, it targeted its addressable market at $32 billion focused on its Cloudflare Application Services. By 2024, it expects its market to be $100 billion with general category growth and the addition of its Cloudflare Network Services and Cloudflare Zero Trust Services. With this rounding out of its offerings, it is making a more attractive platform for customers to grow their spend over time. Its most recent quarters' record 124% dollar-based net retention is evidence this strategy is working.
Lastly, the market for cloud computing is becoming a massive market. International Data Corporation (IDC) forecasts the market for cloud computing and all of the related hardware, software, and professional services to be $1.3 trillion by 2025. This is up from $707 billion in 2021, representing a compound annual growth rate of 17%.
This easy-to-onboard cloud service is attracting more customers and growing its market. If the only thing holding you back is its lofty valuation, this would be a great stock to add to your watch list in case the market pulls back this month."
- The Motley Fool
First, the recent top-line growth and customer numbers are top-notch. Second, the company is growing its addressable market by adding adjacent products. When the company went public, it targeted its addressable market at $32 billion focused on its Cloudflare Application Services. By 2024, it expects its market to be $100 billion with general category growth and the addition of its Cloudflare Network Services and Cloudflare Zero Trust Services. With this rounding out of its offerings, it is making a more attractive platform for customers to grow their spend over time. Its most recent quarters' record 124% dollar-based net retention is evidence this strategy is working.
Lastly, the market for cloud computing is becoming a massive market. International Data Corporation (IDC) forecasts the market for cloud computing and all of the related hardware, software, and professional services to be $1.3 trillion by 2025. This is up from $707 billion in 2021, representing a compound annual growth rate of 17%.
This easy-to-onboard cloud service is attracting more customers and growing its market. If the only thing holding you back is its lofty valuation, this would be a great stock to add to your watch list in case the market pulls back this month."
- The Motley Fool