10 Best Video Conferencing Stocks To Buy

Published on October 21, 2022 at 5:22 pm by Umar Farooq in Hedge Fund Analysis, Hedge Funds, News

In this article, we will look at the ten best video conferencing stocks to buy. You can skip our detailed analysis of the video conferencing industry and go directly to the 5 Best Video Conferencing Stocks To Buy.

According to recent research by Grand View Research, Inc., the size of the worldwide video conferencing market is anticipated to reach $19.73 billion by 2030, showing a CAGR of 12.5% from 2022 to 2030, reported Bloomberg. The significant growth is attributable to the growing use of cloud technologies and video conferencing as a service (VCaaS ). The software segment is predicted to see the highest CAGR of more than 13.0% over the forecast term due to increased cloud-based subscribers on many platforms. Video conferencing services are being widely accepted by small- and medium-sized businesses in order to quickly grow their global operations by implementing a centralized communication platform that makes use of cutting-edge technologies like 4G, 5G, and VoIP.

Some of the best video conferencing companies to invest in include Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Adobe Inc. (NASDAQ:ADBE).

Photo by lucas law on Unsplash

Our Methodology

We scanned our database of 895 elite hedge funds and picked top 10 companies that have notable offerings in the video conferencing market.

Best Video Conferencing Stocks To Buy

10. Logitech International S.A. (NASDAQ:LOGI)

Number of Hedge Fund Holders as of Q2, 2022: 12

Logitech International S.A. (NASDAQ:LOGI) has shown dividend growth for the past nine years. It declared an annual dividend of $0.97 per share on July 12, an increase of approximately 10% compared to the FY21 dividend. The stock has a forward dividend yield of 2.20% with a payout ratio of 25.17% as of October 18. As of October 20, the stock has a PE ratio of just over 13, compared to the software industry average PE ratio of 45.

According to Insider Monkey’s Q2 data, Logitech International S.A. (NASDAQ:LOGI) was found in the public stock portfolios of 12 hedge funds, with collective stakes in the company worth $123.660 million.

Here is what VGI Partners has to say about Logitech International S.A. in its Q4 2021 investor letter:

“We did progressively resume single-stock shorting throughout the year in addition to using baskets to avoid the risk of short squeezes. Logitech, the manufacturer of office and gaming equipment, was an example of a successful short for us during 2021. The business was a large beneficiary of stay-at-home orders which drove a demand spike for home office and video communication equipment as most employees shifted to working remotely. This not only drove a pull-forward of growth, but margins also experienced a step-up due to the lack of promotions. The market started to extrapolate these dynamics as a permanent change in Logitech’s economics, whereas we took the opposite view which has proved closer to reality given a string of disappointing results.”

09. ON24, Inc. (NYSE:ONTF)

Number of Hedge Fund Holders as of Q2, 2022: 17

Rather than being a new upstart, ON24, Inc. (NYSE:ONTF) has been around for over two decades but enjoyed accelerated interest and growth thanks to the Covid-19 pandemic, which prompted it to finally go public 23 years after its founding. ON24, Inc. (NYSE:ONTF) provides a cloud-based digital experience platform that allows businesses to convert customer engagement into revenue through interactive webinars, virtual events, and multimedia content experiences globally. ON24, Inc. (NYSE:ONTF) recently witnessed a decline in its revenue. The company’s management has planned to reduce its workforce by 5% and is hopeful about witnessing growth in revenue in 2023.

On September 12, KeyBanc analyst Thomas Blakey initiated coverage of ON24, Inc. (NYSE:ONTF) with a Sector Weight rating and no price target. At the end of the second quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $176.24 million in ON24, Inc (NYSE:ONTF), compared to 21 in the preceding quarter worth $241.281 million.

Along with Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Adobe Inc. (NASDAQ:ADBE), ON24, Inc. (NYSE:ONTF) is one of the best video conferencing stocks to buy.

08. 8×8, Inc. (NYSE:EGHT)

Number of Hedge Fund Holders as of Q2, 2022: 26

8×8, Inc. (NYSE:EGHT) is engaged in providing contact-center-as-a-service and unified-communications-as-a-service software applications. Its unified platform helps in enabling omnichannel communication to help employees communicate through voice, video, text, chat, and contact centers. In addition to other services, the company provides unified communications, team collaboration, video conferencing, contact center, data and analytics, and communication APIs. It offers 8×8 Work, a self-contained end-to-end unified communications solution, which offers enterprise voice with connectivity to the public switched telephone network, video meetings, and unified messaging, as well as direct messages, open and closed team messaging rooms, short and multimedia services, and more.

8×8, Inc. (NYSE:EGHT) has a market capitalization of $370.69 million as of October 18. The company is expected to announce its next quarterly results on October 27. It was able to comfortably surpass analysts’ expectations about revenue and EPS in the previous quarter. 8×8, Inc. (NYSE:EGHT) revenue showed a decent growth of 21% in the previous year.

Here is what Meridian Funds specifically said about 8×8, Inc. (NYSE:EGHT) in its Q2 2022 investor letter:

“8×8, Inc. (NYSE:EGHT) is a cloud communications provider that offers businesses a unified voice, contact center, video, and chat platform. The company hired a new CEO in late 2020 who has since refocused the company on areas of the market where 8×8 has competitive advantages and the potential to earn higher margins. In conjunction with this change in strategy, the company exited low-growth and low-margin product lines, which has led to what we believe is a temporary slowdown in revenue growth. A recent acquisition that decreased 8×8’s cash position also weighed on investor sentiment. We believe the company will overcome these short-term issues and that, at its current price, the stock is attractively valued. We are willing to be patient as the company works through these setbacks and trimmed our position in the stock during the period.”

07. RingCentral, Inc. (NYSE:RNG)

Number of Hedge Fund Holders as of Q2, 2022: 42

RingCentral, Inc. (NYSE:RNG) is an American company that provides a software as a service (SaaS) platform that allows businesses to communicate with each other. The service includes several features such as video calls and SMS messaging. The company is headquartered in Belmont, California.

The communications market for RingCentral, Inc. (NYSE:RNG) is anticipated to increase at a compound annual growth rate (CAGR) of 13% and reach $69 billion by the end of 2028. In its third fiscal quarter, the firm reported 28% annual revenue growth, while at the same time, subscription revenue increased by 32% annually. In September 2022, Credit Suisse projected that the company’s shares would be worth $40, noting that it was operating in a very lucrative market.

Here is what RiverPark Funds specifically said about RingCentral, Inc. (NYSE:RNG) in its Q2 2022 investor letter:

“RingCentral, Inc. (NYSE:RNG) is a software-as-a-service (SaaS) provider of communications solutions to large enterprises. The company’s solutions replace legacy office phone systems or Private Branch Exchanges (PBX) with a cloud-based virtual solution that enables a customer’s employees to communicate via voice, text, video/web conferencing, and fax over multiple devices including cell phones, tablets, and computers from any location. This cloud-based phone systems market, typically referred to as Unified-Communication-as-a-Service (UCaaS) is a roughly $10 billion market today and is projected to grow to over $100 billion over the next ten years as companies move their communications systems to the cloud.

The move to UCaaS adoption is being driven by both the obsolescence of PBX hardware underlying current office phone systems, and, like cloud adoption across the software stack, cloud-based phone systems being less expensive, more feature rich, and accessible anywhere. RingCentral (which went public in 2013) is the leading vendor to the UCaaS market and has enjoyed greater than 28% revenue growth in every year since its IPO, a growth rate that continued in the company’s recently reported 1Q22 in which it grew revenue 33%. We believe the company can continue to grow revenue north of 25% for many years to come, driven by the global conversion of more than 400 million on-premises phone systems to the cloud. RingCentral is well positioned to continue to win the lion’s share of this UCaaS migration, as the company has partnered with many of the largest legacy PBX vendors (including Avaya, Atos, AlcatelLucent, and Mitel) to be their recommended cloud solution for customers whose maintenance period on their installed systems ends (and the vendors no longer support them). RNG has also partnered with communications giants like Vodafone, AT&T and Verizon to sell co-branded cloud solutions into their customer bases.

As the company’s revenue scales, we expect gross margin to continue to improve from its already strong 80%, while we expect the company to continue to expand its EBITDA margin from 18% in 2022, toward typical SaaS margins of 40% or higher over the next several years…” (Click Here to read the full text)

06. Zoom Video Communications, Inc. (NASDAQ:ZM)

Number of Hedge Fund Holders as of Q2, 2022: 44

Zoom Video Communications, Inc. (NASDAQ:ZM) provides a unified communications platform worldwide. During the Covid-19 pandemic, Zoom Video Communications, Inc. (NASDAQ:ZM) revenues increased by more than 5 times and it has kept these gains and profits. Famous hedge fund managers like Jim Simons, Ken Fisher and Cathie Wood has major stakes in the company. At the end of the second quarter of 2022, 44 hedge funds in the database of Insider Monkey held stakes worth $2.96 billion in Zoom Video Communications, Inc. (NASDAQ:ZM), compared to 43 in the previous quarter worth $3.2 billion.

In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Zoom Video Communications, Inc. (NASDAQ:ZM) was one of them. Here is what the fund said:

“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago (see here) is Zoom Video Communications, Inc. (NASDAQ:ZM) (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed nearly 80%.

Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”

Click to continue reading and see the 5 Best Video Conferencing Stocks To Buy.

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Published on October 30, 2024 at by Inan Dogan, PhD

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Published on November 16, 2024 at by Insider Monkey Staff

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