The software and internet era has disrupted many industries which we though were bulletproof. Now, E-commerce and “The Armageddon of Retail” are just a few of the consequences of internet and a globalized world-market. In so, a few industries have blossomed and software companies might be one of the most promising industries in the future.
Being able to handle tremendous amount of data on secure and projected software has changed the way computers and companies store their data. In this article, we will take a look at 2 software companies with huge potential.
iQIYI, Inc (NASDAQ: IQ)
One of most disruptive companies in the past decade has been the American streaming giant Netflix (NYSE: NFLX). Since its IPO, the stock has returned the absurd amount of 31,260%. However, few people were lucky enough to jump onboard that train in the early beginnings.
Wouldn’t it be wonderful if you could found a Netflix replica before everyone else knew about it? Well, iQIYI, Inc, with the interesting ticker IQ, might be what you look for all along. This Chinese software company is growing at tremendous speed and is the Chinese equivalent of Netflix (NYSE: NFLX), and with little to no competition.
The company has around 6014 employees and insiders own as much as 48.20%. The earning per share this year has been astonishing. EPS is up 101.60% this year and is expected to go up 25.60% during the next 5 years. The stock is currently trading at $23.30 and some analyst even mean that the fair value of iQIYI, Inc is $146.60.
Surely a stock worth keeping an eye on.
Arista Networks Inc (NYSE: ANET)
If there’s one software company with talented management prone to dominate the future, then it’s Arista Networks. The current management are experienced and know how to run a good business. One way of seeing this is the look at how the earnings per share has grown in the past. During the last 5 years, Arista Network’s EPS has grown by 73% and is expected to grow 25.45% during the next 5 years.
The short float is around 5.63% which might be saying that analyst expect the stock to go down a bit. However, the mean consensus is $291.04 which is far above the current stock price at $241.
If we take a look at the debt levels, Arista Networks seems very safe. The quick ratio is 4.60 which means that they have no problem paying their short-term obligations. In total, the debt to equity is only 0.02 which is another way of saying that Arista Networks doesn’t have any meaningful debt. That might turn out to be very positive now that the 10-year treasury yield is moving upwards.
Disclaimer: The author owns no shares in the mentioned companies