As the technology sector
continues to soar, investors may have some fears about whether the stock market
can maintain its red hot pace. In order to protect against any stagnation or
general market decline, investors should look to invest in under-the-radar
equities that have the potential for outsized gains over the coming months and
years. One company that appears to offer such potential is InterCloud Systems
(ICLD).
InterCloud Systems is a
global single-source provider of value-added services for both corporate
enterprises and service providers. The company has assembled a set of assets
and skill sets that complement each other and gives InterCloud the ability to
offer a set of products and services that will increase its competitive
advantage in the two major markets served today; cloud and managed services and
professional services.
Shareholders have enjoyed an
incredible run since the company reported third quarter earnings on November
14th, 2013. After that announcement, the company’s share price appreciated by
more than 400%. Given the rapid growth seen in the company’s revenue and net
income, it’s very likely that the share price surge has only just begun.
As mentioned above,
InterCloud Systems reported its third quarter earnings on November 14th, 2013.
The company reported total revenue of $16.2 million, a year-over-year increase
of just under 450%. The company mentioned that the growth is attributable to organic
growth and acquisitions. The company also reported net income of $1.3 million,
a record number for the company. In addition to year-over-year growth, the
company has an impressive growth on a quarter-over-quarter basis. During the
fourth quarter of 2012, the company generated $11.4 million in revenue. Revenue
jumped to $12.4 million during the first quarter of 2013, and the again to
$14.4 million in the 2nd quarter. As investors can see, the company appears to
be firing on all cylinders.
Investors might be wondering
where the rapid growth is coming from. Part of the growth is certainly
attributable to the company’s participation in “cloud computing.” This is one
of the hottest areas within the technology sector. In fact, Gartner, one of the
largest IT research firms in the world, estimates that global spending on
public cloud services will increase by more than $133 billion over the next
several years. Gartner also predicts that more and more companies will begin
integrating cloud-based platforms through 2016. With that kind of growth, it’s
hard not to like the position that InterCloud Systems is in.
Additionally, the company is
putting together a pretty impressive list of acquisitions. There have been 4
acquisitions over the past couple of years which appear to be setting up the
company for additional growth. Those acquisitions include AW Solutions,
Integration Partners Corporation, and Telco Professional Services and Handset
Testing divisions of Tekmark Global Solutions. Not only do the acquisitions add
to InterCloud’s bottom-line, they help to lay the foundation for vertical
integration. InterCloud Systems acquires the clients of each of these
companies, and can then market its own cloud and professional services. I
expect the power of these acquisitions to be on full display for the rest of
this year.
With the company now valued
at more than $100 million, the acquisition shopping spree is likely to
continue. It will now be easier for the company to leverage its value in order
to acquire companies. While the company has the cash to engage in all cash
deals, a more prudent move would be to use its shares to acquire the companies.
This will help the company preserve its cash that it can use for additional
cloud research & development while continuing to expand its revenue and
earnings growth with the acquisitions.
InterCloud Systems appears
well on its way to becoming one of the premier cloud services providers in the
country. If the company can continue to generate the same kind of revenue and
earnings growth that is has during the past 4 quarters, the company’s market
capitalization is likely to be significantly higher over the coming months and
years.
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Sign up for “The Mission Report” at www.MissionIR.com
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