4 Software Stocks That Could Replicate Zoom's 2020 Rally in 2021

Zoom Video Communications ZM is hands down one of the biggest winners in coronavirus lockdowns, home protection guidelines, and the social distancing trend. The stock is up 464.2% since the beginning of the year.

Demand for Zacks Rank # 3 (Hold) cloud-native unified communications platform, which combines video, audio, phone, screen sharing, and chat capabilities, has increased due to work-from-home and online Learning wave.

Since vaccination programs will take several months to cover a large part of the world's population, socially distancing measures are required to keep the infection rate constant. This will require continued work-from-home and online learning, which in turn could significantly improve Zoom's top-line.

In addition, a hybrid model that includes a few working days from home is likely to be popular with employees. This is also a good sign for Zoom.
4 software stocks to buy in 2021
A solid year is expected for the software sector in 2021, as the demand for SaaS-based services is in high demand in light of the advancing digital transformation as well as the trends in remote working, learning and diagnosis. According to Gartner's latest report, IT spending on enterprise software is projected to increase 7.2% year over year in 2021, after projected to decrease 3.6% in 2020.

Here we're picking four fundamentally solid software stocks that offer good investment opportunities and are well armed for a Zoom-like run in 2021.

NIC EGOV benefits from the increasing speed of digital governance and the move to SaaS. The company's growing customer base is a boon. In addition, new wins in the states of Iowa and Florida remain important catalysts.

Additionally, this currently Zacks Rank # 1 (Strong Buy) company is benefiting from the continued momentum in COVID-19 testing based on partnerships with Impact Health and NEXT Marketing. The full list of today's Zacks # 1 Rank stocks can be found here.

Notably, NIC's solutions are gaining traction as they help the public fight coronavirus-induced disruption. For example, the CheckFreePay cash payment solution helps residents make their property tax payments in cash. In addition, the Alabama Treasury Department is now accepting online appointments for a variety of services through TeleGov, a service offered by NIC in partnership with Microsoft MSFT.

In addition, NIC's outdoor recreation platform is scheduled to go live in Pennsylvania and Illinois in the first quarter of 2021.

The Zacks Consensus estimate for 2020 earnings is $ 1.02 per share after revising up 34.2% over the past 60 days. For 2021, the consensus mark for earnings over the same period has shifted 13.2% north to $ 1.03 per share.
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Price, consensus and EPS surprise from NIC Inc.
Price, consensus and EPS surprise from NIC Inc.
NIC Inc. Price Consensus EPS Surprise Chart | NIC Inc. quote
CrowdStrike Holdings CRWD is capitalizing on the increasing demand for cybersecurity solutions due to multiple data breaches and the urgency of security and networking products sparked by the COVID-19 remote working trend caused by the pandemic.

Additionally, the continued digital transformation and cloud migration strategy pursued by companies are the main drivers for this currently ranked second (Buy) Zacks company.

CrowdStrike's portfolio strength, mainly the 10 cloud modules of the Falcon platform, increases competitive advantage and helps add users.

Additionally, the company's next generation antivirus EDR and device control products are well positioned to capitalize on the thriving remote work culture.

The consensus mark for the 2020 bottom line is 22 cents per share, after having been revised upward by a whopping 266.7% in the past 60 days. For 2021, the consensus mark for earnings over the same period has shifted 45.5% north to 32 cents per share.
CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise
CrowdStrike Holdings Inc. Price, Consensus and EPS Surprise
CrowdStrike Holdings Inc. Price Consensus EPS Surprise Chart | CrowdStrike Holdings Inc. quote
Covetrus CVET builds on the strong demand for online solutions in the veterinary practice run by coronavirus. Currently ranked as Zacks # 2, this company is helping veterinarians grow their digital presence. Additionally, robust pet acceptance and higher additional spending on pet care bodes well for the company.

Covetrus' outlook for 2021 should depend on its solid recipe management business. The company's investment in expanding its pharmacy capacity and in innovative solutions are important levers. In addition, the improved financial situation enables investing in veterinary study groups, which is expected to strengthen customer relationships.

In addition, the company plans to enter the Australian and New Zealand markets in the second half of 2021 with its recipe management in the second half of 2021. This should boost international growth. In addition, cost-cutting initiatives resulting from Covetrus' exit from the low-margin distribution business in France are expected to drive profitability.

The Zacks consensus estimate for 2020 earnings is 85 cents per share, an increase of 11.8% over the past 60 days. The consensus mark for earnings in 2021 is 91 cents per share after moving 11% north over the same period.
Price and Consensus from Covetrus, Inc.
Price and Consensus from Covetrus, Inc.
Price Consensus Chart by Covetrus, Inc. | Covetrus, Inc. quote
J2 Global's JCOM advertising business has limited activity in local, travel, food, automotive and industrial sectors that have been largely affected by the coronavirus. This in turn has a positive effect on the overall business. Additionally, the company's healthy display business (nearly 40% in healthcare) is expected to grow steadily in sales.

Cloud services are expected to benefit from the company's growing data protection and fax businesses. Additionally, the coronavirus-led work-from-home wave augurs, as well as J2 Global's security, privacy, and voice services are seen as essential for a remote work facility.

In addition, J2 Global's growth policy is promising. Strategic acquisitions expanded the company's customer base, enabled access to new markets and expanded the product range. RetailMeNot's recent buyout is also expected to bolster the presence of the currently Zacks Rank # 2 company in the affiliate commerce industry.

The consensus mark for the 2020 final result is $ 7.92 per share, an increase of 8.8% over the past 60 days. For 2021, the consensus mark for earnings over the same period has shifted 15.1% north to $ 8.69 per share.
j2 Global, Inc. Price and Consensus
j2 Global, Inc. Price and Consensus
j2 Global, Inc. Price Consensus Chart | j2 Global, Inc. offer
Zack's top 10 stocks for 2021
In addition to the stocks discussed above, would you like to find out more about our top 10 tickers for the whole of 2021?

These 10 are carefully selected from over 4,000 companies that fall under the Zacks rank. They are our top buy and hold tips. Start your access to the new Zacks Top 10 stocks >>

Would you like the latest recommendations from Zacks Investment Research? Today you can download 7 Best Stocks for the next 30 days. Click here to get this free report

Microsoft Corporation (MSFT): Free Stock Research Report

j2 Global, Inc. (JCOM): Free Stock Research Report

NIC Inc. (EGOV): Free Stock Analysis Report

Zoom Video Communications, Inc. (ZM): Free Stock Research Report

CrowdStrike Holdings Inc. (CRWD): Free Stock Research Report

Covetrus, Inc. (CVET): Free Stock Research Report

To read this article on Zacks.com, click here.

Zacks Investment Research
In this article
ZM
-2.27%
CVET
+ 0.33%
CRWD
-1.06%
JCOM
-0.02%

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