There’s no question that cloud computing will be one of the fastest-growing sectors of the next decade.

According to ResearchandMarkets, the global cloud computing market will grow 123% between 2018 and 2023, to a total of $623.3 billion.

But with a dizzying array of cloud computing businesses to choose from, the question is which one will get the lion’s share of that growth?

A good place to start would be a company that provides cloud computing and networking services to 99 of the Fortune 100 – and 98% of the Fortune 500.

That would be the dividend stock we’re bringing you today…

It’s a dividend-paying company that has established itself as the corporate world’s go-to software provider by bringing together any app, operating system, or device into one easy-to-use interface.

The result is seamless communications for organizations large and small, while every employee can work in whatever way they find comfortable. And for those with multiple devices and apps – that’s most of us – there’s no need to import or export.

Plus, this dividend stock is available at a stunning discount. Part of that stems from the fact that this company is not as recognizable as cloud computing conglomerates like Amazon.com Inc. (NASDAQ: AMZN) or Microsoft Corp. (NASDAQ: MSFT).

That’s why it just got a top score from our Money Morning Stock VQScore™ system.

In fact, according to at least one metric, it’s now trading at just half its value. So if you grab it now, you could double your money in short order.

After a Shaky Start, This Company Now Dominates Its Industry

Citrix Systems Inc. (NASDAQ: CTXS) got its start in 1989 providing remote access for Microsoft operating systems. The company almost folded when its first product, designed to work with OS/2, was made obsolete by the announcement of the new Windows operating system.

Thankfully, some big investors saw the potential in Citrix’s product.

The company used an infusion of cash to update the interface, and by 1994, it was generating $10 million in annual revenue. Since then, Citrix has led the way into the next generation of remote computing, with offerings based in cloud computing and Software as a Service (SaaS) for over 400,000 clients.

Aside from the benefit of bringing multiple platforms together into one interface, Citrix products also increase security. Employees who repeatedly engage in risky online behavior – like opening problem files or downloading sensitive material – are flagged by the system so supervisors can look into it. And administrators can enable and disable features with the click of a button in response to warnings.
Citrix has made a number of strategic acquisitions over the years in order to keep its software suite at the top of the industry.

When team members can’t meet in the same room, for example, there’s Podio, which Citrix acquired in 2012. Podio creates a virtual room for collaborators, allowing them to talk to each other, share files, and do any number of other customizable tasks. In 2016, Podio won an Editor’s Choice award for “The Best Online Collaboration Software” from PC Magazine.

With more and more companies moving to the cloud, Citrix is undergoing a shift in its revenue stream from one-time purchases to a subscription model. Subscription revenue in its most recent quarter grew 45% from the year before. Subscription bookings now represent 51% of all company bookings, and that is expected to increase to as much as 55% this year.

As the cloud computing industry grows over the next several years, that rising share is going to be part of a bigger and bigger pie.

Now Is the Time to Buy CTXS

Citrix is coming off 16 straight earnings beats. And according to FactSet, it’s projected to boost its EPS for each of the next three years.

But Wall Street has been sleeping on this stock. It has fallen 17% since last August.

Some of that share price weakness might be due to a recent security breach. But that event, while unfortunate, was an internal matter that did not affect Citrix users. And it doesn’t affect Citrix stock’s value.

The company’s board appears to be well aware of that. Last quarter, the company bought back $380 million worth of its stock. And that’s just the beginning: There’s still $770 million left in Citrix’s current program to return capital to shareholders.

The valuation metrics show CTXS as undervalued nearly across the board.

The stock’s price to sales and price to cash flow ratios both come in at just 60% of industry average. And its forward price/earnings ratio of 15.2 is half the industry average.

That means you could be looking at a 100% pop in the short term.

On top of that, CTXS’s 1.5% dividend yield is 60% better than the industry average.

So if you’ve been wondering which stock in the crowded cloud computing field is the one to buy, this dividend stock is an obvious choice.

— Stephen Mack

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Source: Money Morning