Traders may be shifting towards airlines, cruise ships, and reopening movie chains as the world settles into a post-pandemic recovery. But many changes that occurred are likely to remain. One of those is the shift towards cloud services that started last year.
As the work-from-home era likely won’t go back to the pre-pandemic levels of being in the office, it’s no surprise that many cloud names in tech have been reporting solid earnings in the first quarter of 2021.
Case in point? Salesforce.com (CRM). The cloud-based enterprise software giant reported a 23 percent rise in earnings from the same quarter a year ago. That came in ahead of the company’s guidance.
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Despite that strong performance, the company has underperformed the S&P 500 on a one-year basis. And shares are down 17 percent from their 52-week highs. That’s in spite of solid growth, and an emerging view in the market that cloud services are likely to keep growing strong.
Action to take: This trend points to a potential buying opportunity. While shares bounced higher following earnings, they’re still well off their highs.
Investors may like shares for the long term in the $230 range. It will be a while before shares pay a dividend, however.
For traders, the earnings results add to a small uptrend that started in recent sessions. The August $250 calls, going for about $7.00, are a reasonable way to play that trend.
Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.