What criteria were used to compile the list of best cloud computing stocks to buy under $10? How does Olo Inc.’s cloud-based platform benefit restaurants in the current digital landscape? What is the projected spending on public cloud services by 2025 according to Gartner? Why might investors be particularly interested in the stocks held by hedge funds? How does Olo Inc. rank among other cloud computing stocks in this article?
We recently published a list of 10 Best Cloud Computing Stocks to Buy Under $10. In this article, we are going to take a look at where Olo Inc. (NYSE:OLO) stands against other best cloud computing stocks to buy under $10.
Cloud computing refers to delivering computing services—such as servers, storage, databases, networking, software, and analytics—over the Internet (the “cloud”). It means businesses and individuals can access these resources on demand instead of owning and maintaining physical servers and infrastructure, paying only for what they use. This article looks at a broader definition of cloud computing, not just cloud infrastructure companies. These include companies delivering products via the cloud, including the “as-a-service” model, such as software-as-a-service (SaaS), Infrastructure-as-a-service (IaaS), Platform-as-a-service (PaaS), cloud-native applications, or platforms and services running on the cloud.
The cloud computing industry has grown impressively over the years because of its cost-effectiveness, its ability to provide unlimited scalability, and the increased speed of digital transformation. Simply put, digital transformation and adopting new technologies have become crucial to survival and competitiveness in the current market environment, which leads to higher demand for cloud computing services. Even smaller firms can now afford to adopt new technologies with the help of cloud services. This allows them to become agile and well-equipped to compete and adapt to changing market dynamics.
However, this technology still has a long growth trajectory ahead of it, as highlighted by Gartner in its latest report on this topic. In this report, Gartner had projected that 90% of organisations will adopt hybrid cloud by 2027. The research firm also forecasted that worldwide end-user spending on public cloud services will reach around $723 billion in 2025 from $596 billion in 2024. Of the total, IaaS and PaaS segments are expected to grow the fastest, with an increase of 25% and 21.6%, respectively. While these two segments are growing faster, SaaS is expected to remain the largest segment, contributing around 41% of the total spending.
On CNBC’s Closing Bell Overtime program some months ago, Goldman Sachs’s managing director Eric Sheridan discussed AI and cloud computing, among other topics. He noted that the cloud computing sector remains robust and is further strengthened by the increasing deployment of AI technologies. Additionally, businesses are increasingly looking to integrate AI into their workflow to improve productivity and efficiency. In addition, he said that the industry is still looking for that “killer application” for AI, which essentially means a use case that could have a sizeable transformative effect on industries or lives using AI. Adding to his views, Eric also highlighted that while AI’s benefits are visible in the short term, long-term impacts and benefits are yet to become visible. Overall, this discussion indicated robust growth in cloud computing in the coming years.
To identify the best cloud computing stocks to buy under $10, we first compiled a list of cloud computing stocks using screeners, ETFs, and financial media reports. We then screened for stocks trading below $10, with a market capitalisation of at least $300 million, and a potential upside greater than 10%. We identified the top 10 stocks with the highest hedge fund ownership from this refined list by leveraging data from Insider Monkey’s Q4 2024 hedge fund database. Finally, we ranked these stocks in ascending order based on the number of hedge funds holding positions in them.
Note: All pricing data is as of market close on March 28.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is Olo Inc. (OLO) the Best Cloud Computing Stock to Buy Under $10?
Current Share Price: $6.15
Number of Hedge Fund Holders: 30
Olo Inc. (NYSE:OLO) provides an enterprise-grade, open SaaS platform to help restaurants with online ordering and delivery. Its cloud-based platform allows restaurants to handle orders, manage deliveries, and improve how they connect with customers. The software integrates with a range of restaurant technology solutions like point-of-sale (POS) systems, delivery service providers, and payment processors. Its software makes operations more efficient for restaurant businesses. The company serves various restaurant chains, including Shake Shack and Wingstop.
Olo’s platform is key in helping restaurants update their operations, handle orders more efficiently, and improve the customer experience as more consumers turn to digital platforms and off-premise dining. The company is well-positioned to capitalise on a vast addressable market, fuelled by the restaurant industry’s shift toward digital operations and the rising need for seamless ordering and payment systems.
The company continued its innovation momentum with 13 new platform enhancements and a higher ARPU, driving Q4 revenue up 21% year-over-year to $76.1 million. It reported strong growth metrics, including $29 billion in gross merchandise volume and a rise in gross payment volume to $2.8 billion from $1 billion in 2023. For 2025, the company expects revenue between $333-$336 million and adjusted operating income of $45.5-$47 million. The company is also likely to witness better operating leverage, which should partly offset the impact on gross margins due to revenue mix shifts.
Overall, OLO ranks 3rd on our list of best cloud computing stocks to buy under $10. While we acknowledge the potential of OLO to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
Is Olo Inc. (OLO) the Best Cloud Computing Stock to Buy Under $10?
When investing in the booming sector of cloud computing, numerous options compete for the attention of investors. Among these, Olo Inc. (NYSE: OLO) stands out as a notable player, particularly for those looking for stocks priced under $10. But does it deserve the title of the best cloud computing stock in this price range? To evaluate this, we must delve into the company’s operations, market position, and future prospects.
Overview of Olo Inc.
Founded in 2005, Olo Inc. provides a platform that enables restaurants to manage digital ordering. In a world increasingly reliant on technology, Olo’s platform offers an essential service that helps restaurants streamline operations, from menu management to order processing and delivery. With an impressive suite of offerings including online ordering, payment processing, and customer engagement tools, Olo stands as a crucial partner for restaurants aiming to navigate the digital economy.
The company’s model focuses on providing Software as a Service (SaaS), which allows clients to access its services via the cloud. This approach not only assures constant updates and improvements but also enables Olo to achieve scalability—a key factor for growth in the technology sector.
Financial Performance
As of the time of this writing, Olo’s stock trades under $10, making it an attractive option for investors seeking affordable stakes in the tech industry. Olo has demonstrated steady revenue growth over the years, reflecting its solid client retention and an expanding customer base that includes some of the biggest names in the restaurant industry, including Shake Shack and Wingstop.
Olo’s financial results have shown resilience, especially during the tumultuous COVID-19 pandemic when many restaurants turned to digital solutions. The company’s revenues grew substantially as more businesses sought Olo’s platform to enhance their online order capabilities, a trend likely to continue as consumer preferences shift more towards digital dining experiences.
Market Potential
The restaurant technology sector is projected to grow significantly, with the global restaurant management software market expected to reach over $6 billion in the coming years. This growth is driven by the rising demand for digital ordering and delivery services. Olo is excellently positioned to capitalize on this market trend, particularly as more restaurant operators recognize the need for technology integration in their business models.
Moreover, the efficiency and convenience that comes with Olo’s offerings appeal not only to restaurant owners but also to consumers, who prefer streamlined digital experiences. As the foodservice industry recovers and expands post-pandemic, Olo’s potential for customer acquisition and revenue growth appears promising.
Competitive Landscape
Despite its advantages, Olo operates in a competitive environment. Companies like Toast, Square (now Block, Inc.), and other cloud-based solutions for the foodservice industry also vie for market share. However, Olo’s focused approach on digital ordering and its established relationships with numerous prominent brands give it a unique edge.
Moreover, Olo’s distinct feature set, including API integrations with third-party delivery systems, can enhance restaurant operational efficiency—something many competitors are still aspiring to achieve. This focus allows Olo to fortify its niche in the rapidly evolving digital ordering landscape.
Investment Considerations
For potential investors, several factors make Olo a compelling investment choice. First, its strong financial outlook indicates promising growth prospects. With continued expansion of its client base, even in challenging economic climates, Olo showcases resilience and adaptability.
Additionally, considering Olo’s price point, buying shares for under $10 may present a low-risk opportunity with high reward potential. Such investments could be particularly appealing to those seeking exposure to the cloud computing sector without committing significant capital.
However, investors should also be mindful of the risks associated with investing in a company that operates within a competitive and rapidly changing market. Factors such as shifts in consumer preferences, economic downturns, or emerging technology trends could impact Olo’s performance.
Conclusion
In assessing whether Olo Inc. is the best cloud computing stock to buy under $10, it’s crucial to consider its strong market position, solid financial growth, and the burgeoning demand for technology in the restaurant sector. While Olo faces competition, its focus on digital ordering solutions positions it favorably within a growing industry.
However, as with any investment, potential buyers should conduct thorough research, consider market trends, and weigh the associated risks. For those interested in cloud computing investments in the foodservice sector, Olo Inc. is undoubtedly worth considering, but as always, due diligence is essential before making any investment decisions.
Olo Inc. (OLO) operates in the cloud computing sector, specifically focusing on providing order management and delivery solutions for the restaurant industry. When evaluating whether Olo is the best cloud computing stock under $10, several factors should be considered:
Market Position: Analyze Olo’s position in the market compared to competitors. Look at its growth potential, customer base, and unique selling propositions.
Financial Performance: Examine key financial metrics such as revenue growth, profitability, and cash flow. This can give insights into the company’s current performance and future potential.
Valuation: Compare Olo’s valuation ratios (such as P/E, P/S, and EV/EBITDA) to industry averages and peers. This helps assess whether the stock is over or undervalued.
Industry Trends: Consider the growth of the cloud computing sector, especially in the restaurant and food service industries. The ongoing digital transformation and increasing demand for delivery services have implications for Olo’s growth potential.
Risk Factors: Evaluate the potential risks associated with investing in Olo, such as competition, market volatility, and operational challenges.
- Analyst Ratings: Check for any recent analyst ratings or research reports that provide insights on Olo’s performance and prospects.
Investors should conduct thorough research and consider their risk tolerance before making investment decisions, especially with stocks in volatile sectors like cloud computing.