Paul Meeks is the most recent addition to Sloy, Dahl & Holst and has brought to our firm a wealth of experience in technology stocks. Paul recently appeared on CNBC’s Fast Money Halftime Report to discuss his thoughts on purchasing stock in cloud-related companies.
When it comes to this unique type of technology stock, Paul’s methodology is to wait until the stock dips before buying. But what do you need to know about this stock before that point? Which companies are worth investing in and how does valuation factor into your decision to buy?
According to Paul, Amazon Web Services is the company that’s doing cloud services the best. The gap between Amazon and its competitors is fairly large, and this delta is forecasted to remain quite large. Even so, there is the possibility of a rise in momentum from other cloud-related businesses--particularly Microsoft Azure.
Paul recommends that tech investors keep Microsoft Azure on their radar and watch for a change in profitability. A price/earnings to growth ratio may be the best way to determine valuation for Microsoft Azure and other cloud businesses. Paul also advises investors to look at a company’s growth and position in relation to its total available market. These tend to be smart methods for sizing up these cloud-related businesses and determining whether or not investing is a good idea.
To conclude the segment, Paul gives a word of caution to current Amazon business stockholders: be ready to cut back. Amazon will soon become a four-figure stock and those who have the stock heavily weighted in their portfolio may want to do some readjusting.