This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Sunshine in the Clouds

NEW YORK (TheStreet) -- You can bet that when "the cloud" shows up in consumer advertising, as in the Microsoft (MSFT) ads that say, "To the cloud...," it's just the tip of the iceberg. For years software firms have been using cloud-based architecture to enhance computing and reduce costs.

But it's reached a tipping point of sorts, and the projections are getting that "hockey stick" quality that investors know and love. For instance, according to a March 2012 International Data Corporation study, the cloud computing sector will generate approximately 14 million new jobs and $1.1 trillion in profits by the year 2015.

Mind you, that date is just around the corner. We should all be mindful, too, of the fact that the IDC report was sponsored by Microsoft, which has a vested interest in promoting the cloud business.

Still, if we only get part of the way there, I'll be a happy investor. As I've written many times, companies at the forefront of innovation and new technologies -- even if they are decidedly non-tech such as food manufacturers or retailers -- tend to have a significantly higher returns than the market average. Accordingly, we like and own VMware (VMW) and Citrix Systems (CTXS), two of the smaller and more aggressive names in the space.

Further, IBM (IBM), Oracle (ORCL) and Microsoft are growing their cloud business. Companies such as these present an opportunity and a risk as well.

As "older" technology companies, they grew up on older, in situ, computing. This legacy business is lucrative and evolving. Therefore, they must balance the needs of existing and profitable customers while developing cloud solutions for these and new customers to grow into.

It's a tricky balancing act, but Oracle has been doing it very well, and shareholders have been rewarded with a year-to-date return on ORCL shares of approximately 26%.

However, there are risks, too. As Canaccord Genuity software analyst Richard Davis said following the most recent earnings report, "We still struggle with the future impact of the 300 or so private cloud companies that we know, almost all of which are aiming at Oracle."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,985.61 +78.99 0.47%
S&P 500 1,972.83 +9.12 0.46%
NASDAQ 4,419.0340 +27.5710 0.63%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs