Skip to main content

5 Ways to Buy Big Data Stocks

By U.S. News & World Report

Digital information is being created at a monstrous pace with the explosion of Web applications, e-commerce, online transactions and social media. Companies that track, store, analyze and provide database solutions are poised to benefit from the growing big data trend.

Investors looking to get in on the ground floor of stocks that have the sizzle of fledgling dot-coms may find that big data companies offer attractive opportunities. “As a species, we now collect and store somewhere between 2 and 3 trillion megabytes of data per day. A lot of that is raw noise, but the patterns that shine through can be extremely valuable to corporate management looking for operating efficiency, better-targeted marketing or even just quicker damage control when the chatter starts going the wrong way,” says Hilary Kramer, hedge fund manager, equity analyst and editor of several financial newsletters.

Looking ahead, data creation is expected to only increase in the years ahead. “We are seeing an explosion of data that is being created within both the consumer and corporate area. Our view is that you will see data growth in the range of 30 to 40 percent on an annualized basis over the next decade,” says Angelo Zino, senior industry analyst, equity research at S&P Capital IQ.

The key trends driving expansion in big data include growth in the mobile space as consumers create new data via their phones, the adoption of the cloud and social media, Zino says. “You are able to capture a lot more data today than ever before, and mobility is driving that,” he says.

Every device with an embedded processor creates data, and theoretically all of this data could be analyzed and used for business needs. “It’s estimated that just over 10 percent of data is generated by machines, but industry analysts expect that to rise to 40 percent within the next five years or so. Earlier in the year, IBM stated that around 90 percent of the data created by mobile and smart devices is never analyzed, meaning there is a massive opportunity,” says Tyler Laundon, chief analyst of small-capitalization stocks and growth stocks at Wyatt Investment Research.

Potential stocks run the gamut from mature companies like IBM, which keeps folding new big data applications into its Watson analytic platform, to relatively small plays. “The immediate appeal for investors is that there’s vast potential growth here in a market that’s otherwise starving for signs of the next high-tech revolution,” Kramer says.

Here’s a look at five stocks analysts like now:

International Business Machines Corp. (ticker: IBM) is a major player in the enterprise software, IT services and hardware arena. It may be an old-school stock, but it does offer exposure to the big data trend. “IBM shares look undervalued, and the company does have some exposure to big data, though it is a legacy player and has a lot more going on than just analytics,” says Pete Wahlstrom, director of technology equity research at Chicago-based Morningstar, an investment research firm. Morningstar rates “fair value” for IBM at $178 per share.

IBM has become increasingly focused on big data and Watson analytics, Laundon says. “Earlier in the year it announced plans to invest $3 billion to build an Internet of Things division. This specialized division will work to harness and analyze the vast amount of data collected and created by tablets, smartphones and connected devices. IBM’s push into big data could help the entire space over the next year by increasing [merger and acquisition] speculation and investor interest,” Laundon says.

Hortonworks (HDP) is a leading player in the database solution space. “The company essentially sells the ‘picks and shovels’ to would-be data miners, especially smaller businesses that may not have the scale to support their own supercomputing solutions or hire IBM,” Kramer says.

On a relative basis, Hortonworks is still a small player in the overall tech world, with revenue now cresting more than $80 million a year. “It’s still burning roughly that much cash as it ramps up. Granted, the company is expanding its bookings at a rate of 40 to 50 percent a year as Fortune 500 partners roll out their big data programs on top of the HDP platform, so this play could pay off within a matter of years,” Kramer says.

Splunk (SPLK) is a firm that specializes in machine-generated data. “This is data that is produced by all varieties of electronic devices, including home appliances, electrical meters, mobile devices, automobiles, medical devices, GPS devices and radio-frequency ID tags, among others,” Laundon says. “Splunk makes money, in part, depending on how often subscribers access data sets and how much data they sift through. The more data users can access, the more desirable the platform becomes, and the more revenue Splunk will generate.”

EMC Corp. (EMC) is a leading provider of IT storage hardware solutions to promote data backup. S&P Capital IQ has a “strong buy” on EMC, with 12-month target at $30. “EMC is the name we are telling investors to buy when it comes to big data,” Zino says. EMC has an attractive financial position with net cash per share over $4.50, he says. “This will allow them, if need be, to capitalize on potential acquisitions. We view the sum of the parts as greater than the whole. The market is significantly undervaluing its assets,” Zino says.

Tableau Software Inc. (DATA) provides business analytics and software products. Tableau is a “next-generation” big data player with shares that, according to Wahlstrom, are trading in 3-star territory on the company’s rating scale, meaning DATA stock should offer a fair return. Morningstar rates “fair value” at $90 for Tableau Software.

Watch for mergers and acquisitions. The hot nature of these companies leaves the sector ripe for mergers and acquisitions. Any of the smaller players can get taken off the board by a tech giant like IBM at any time, Kramer says. “One of my favorite picks in the space was actually Yodlee (YDLE), which harvested consumer financial data in a format that banks and hedge funds could interpret for their own sales or trading purposes. Yodlee got taken out for roughly a 50 percent premium. Build a portfolio out of likely acquisition targets, and you might end up with shares of the ultimate winners after all,” Kramer says.

More from U.S. News

The Best IPOs of 2015 (So Far)

11 Stocks That Donald Trump Loves

Your 7-Step Checklist to Choosing a Financial Advisor

5 Ways to Buy Big Data Stocks originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related Stories

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote