Everyone loves Microsoft and its latest earnings report shows why it deserves a spot in everyone’s portfolio. Revenue came in at $46.2 billion an increase of 21% year over year and net income was $16.5 billion an increase of 47% year-over-year.

Even more impressive is that those two numbers don’t tell the whole story as older products like Windows are not seeing any growth at all, hiding big growth divisions. Azure, its cloud product grew 51% year-over-year and several other businesses saw similar growth profiles.

Microsoft is really firing on all cylinders and that’s why I want to tell you about a company you can buy for less than $10 that is riding Microsoft’s coattails…

Hey, Alex Kagin again, part of the research team at Strategic Tech Investor. I wasn’t able to make a video for you all this week, but I still wanted to give you my favorite stock of the week. In 5 minutes, I’m going to tell you why AvePoint Inc. (AVPT) could be one of the best plays off of Microsoft’s cloud business.

AvePoint is the largest independent vendor of software solutions to migrate, manage, and protect data in Microsoft 365 and more than 8 million cloud users rely on their solutions on a daily basis.

And riding this growth and shift to the cloud has helped them grow revenue 38% year-over-year to $45.3 million with its fullyear guidance to be between $192 and $196 million. Given all the companies that have pulled guidance in the last few months, this gives me more faith this company can meet their numbers.

Microsoft’s Hidden Supercharger
It’s hard to overstate just how big a deal this trend is. As 5G wireless becomes more and widespread, any business that operates its services on the cloud is going to see its potential for scaling and service massively increase.

The result of this is going to be huge profit potential for anyone investing in the cloud computing sector.

But AvePoint is a star example. I like everything about this company. Being one of the largest partners, they meet with Microsoft regularly to discuss what is coming down the pipeline and they get API access ahead of time to learn the products. This gives them the ability to roll out new products to customers without major issues. To top it off they are also a five-time winner of the Microsoft Partner of the Year Award.

AvePoint is a leveraged play off of Microsoft’s fast-growing businesses like Office 365, Teams, SharePoint, and Azure and it is not just a flash in the pan. Most businesses are building work from home plans into their permanent structure and over the last year corporations have learned how important cloud access really is. Employees also feel the same way with roughly 60% of the workforce preferring to work remotely.

Strategic Tech Investor has talked about a dynamic very similar to this one before.

The New World of IT Growth
Data growth and the cloud have entirely changed the IT landscape. Microsoft Teams has expanded its user base almost 100% in the last year and the shift to the cloud is expected to continue its growth at a compound annual rate of 21% through 2027.

Deploying these technologies and managing them can be difficult and AvePoint is bridging the gap between what Microsoft Cloud offers and what enterprises require. This is a big reason again why AvePoint maintains 8 million loyal users. In fact, their net revenue retention rate of 110%, so they can even grow without acquiring new customers.

With a large and addressable multibillion-dollar market, they see a clear path to double-digit revenue growth with a target as high as $1 billion in revenue-over 6 times what they did in 2020.

This is not a business to sleep on. Not only are they riding Microsoft’s coattails to big growth, they have also started business deploying products from Google and Salesforce-yet another way to increase their business with current and new customers. At roughly $10 a share, AvePoint is trading at roughly 11x enterprise value to sales and at 10x price to sales, much lower than the rest of the high-growth software industry.

— Alex Kagin

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Source: Strategic Tech Investor