If you hear someone suggesting you invest in “containers,” please don’t get confused.
Most folks would naturally think of these as giant metal shipping boxes that are integral for global trade. You may recall their 6 days of internet fame when an overburdened ship was stuck in the Suez Canal back in March.
However, the containers I have my eye on won’t be found lodged in a waterway because they reside deep inside remote data centers.
Basically, they’re modules that hold software code that allow clients to use their data storage and servers more efficiently. Only a few highly trained individuals are able to operate them correctly.
As a result, these containers are quickly becoming a vital part of the $371.4 billion cloud computing industry. And I can show you how that industry is giving us an incredible wealth building opportunity…
To The Cloud!
Networking firm Cisco Systems Inc. (CSCO) says 94% of all computing this year will flow through the cloud.
With that in mind, today I want to chat with you about a great way to play this entire field with an investment that beats the broad market by 130%…
There’s no denying the massive Covid-fueled fueled demand for remote computing.
Even as the world opens up again, millions of people are still working from home, a luxury that never would have been possible without cloud computing which allows us to access data and applications from anywhere in the world via a web connection.
This Sector Has Doubled but It’s Just Getting Started
As I noted a moment ago, Gartner says the global sector last year was worth $371.4 billion. But that actually understates the potential here.
By 2025, the field will more than double to $832.1 billion. That’s an annual growth rate of 17.5%
And that puts the new relatively new field of containers front and center.
The big trend right now is for companies to be able to respond quickly to changing demands, like offering more mobile access to offsite employees and customers.
Cloud containers do just that and also are a great way to harness the power of AI. It’s easier and more efficient to do so in these structured software modules than to rewrite millions of lines of code in a complex cloud system.
Ironically, there’s so much going on with containers and cloud computing that finding the right play can intimidate many investors.
And the sector is only going to get even stronger as 5G wireless connections become the norm, and accessing online data remotely becomes even easier.
This could lead to a huge variety of stocks multiplying their value ten times over by the end of 2021. I don’t have time to go into too much detail about how best to play them right now, but I can tell you all about it right here.
And in the meantime, you don’t even need to make a specific decision when it comes to cloud computing investments. There’s an easy way to target a broad swath of the sector.
The All-Inclusive Cloud Computing ETF
It’s an investment I continue to recommend wholeheartedly – the First Trust Cloud Computing ETF (SKYY). Of course, it owns the most famous names like Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT), the number 1 and 2 cloud hosting firms respectively.
But SKYY goes much deeper than that. In all, it holds 65 stocks. It’s an intriguing blend of great companies. Take a look:
- Adobe Inc. (ADBE)
One of the more successful firms at moving to the cloud and getting rid of physical products. You may recall that Adobe is the go-to firm for creative professionals because of Photoshop for photographers and Illustrator for graphics pros. Those and other products are now offered through the high-margin Creative Cloud platform.
- Veeva Systems Inc. (VEEV)
An aggressive, growth-centric provider of essential cloud computing services to the life sciences industry. Veeva‘s suite of cloud-based software tools helps companies deal with all the intricacies of working in biotech, not the least of which is keeping accurate records for FDA trials for its 600 clients., including large firms like AstraZeneca PLC(AZN) and Bayer AG(BAYRY).
- Akamai Technologies Inc. (AKAM)
Operates a massive global network of data centers. These centers provide direct connections between the servers of today’s leading tech and telecom firms, enabling the seamless hand-off of critical and sometimes sensitive data. Akamai’s software and servers have already proven their worth against malicious software code aimed to disrupt major networks.
- Splunk Inc. (SPLK)
Primarily known as one of the world’s top data-analytics firms. Based in San Francisco, Splunk has quickly become the go-to firm for a sub-sector known as “DevOps,” a process of helping companies make a transition from legacy systems to cutting-edge digital tech. Splunk also helps clients make sense of highly complex and unstructured data no human could understand.
The Big Picture
Add it all up and you can see that this is a great way to invest in the new field of cloud computing containers and virtually every other aspect of cloud computing.
With this one play, you get a mix of both software and hardware firms and we are talking market-crushing performance to boot.
Over the past five years, the bellwether S&P 500 has set dozens of new record highs and has gained 99.5%.
By contrast, SKYY is up just shy of 229%. That translates to beating the broad market’s historic bull run by 130%.
Bear in mind, that doesn’t count the “psychic returns” of having the fund managers doing all the heavy lifting in picking best-of-breed cloud stocks.
Now you know why I’m still so high on this ETF.
Simply stated, it’s a great way to build wealth over the long haul by harnessing one of the great unstoppable tech trends.
Cheers and good investing,
Michael A. Robinson