According to Accenture, edge computing “refers to a range of networks and devices at or near the user.” It allows data to be processed quickly and in larger amounts. Additionally, edge computing enables the launch of “new interactive, human experiences, [including] self-driving cars, autonomous robots.” And it allows firms to automate functions in their physical locations and enhance the technology of their facilities easily. Given the many use cases of edge computing, it’s worthwhile for investors to find the best edge computing stocks to buy.
Even better, the edge computing market could surge from $15.95 billion as of 2022 to nearly $140 billion in 2030, according to Fortune Business Insights. In fact, here are three companies that are well-positioned to exploit this growth, making them very promising edge computing stocks. Given their low valuations, I believe that all three can skyrocket over the next year.
A10 Networks (ATEN)
A10 Networks (NYSE:ATEN) provides networking products, application delivery products, and load balancing solutions for edge networks. In 2022, A10, which also provides IT security systems, generated revenue of $280 million, up from $250 million in 2021 and $225 in 2020. Its operating income dropped slightly to $51.2 million in 2022 from $53 million in 2021 amid high cost pressures, but its OI was far above its 2020 level of $33.4 million and its 2019 level of $17.7 million.
Last quarter, the firm’s top line fell 8% year-over-year amid “macro headwinds and project delays.” But it still expects its earnings per share, excluding certain items, to climb at least 10% this year. So it sounds like the firm was indeed hurt by temporary challenges last quarter. The shares are changing hands at a relatively low forward price-earnings ratio of 17.5 times and analysts, on average, expect its EPS to climb to 94 cents next year from 80 cents in 2023.
For Q1, Akamai reported that its revenue increased 1.4% versus the same period a year earlier. For all of 2023, the company expects its top line to come in at about $3.785 billion, compared with the $3.6 billion that it generated in 2022. Perhaps most importantly and certainly most impressively, AKAM predicts that it will report 2023 EPS, excluding certain “one-time items,” of $5.69-$5.84, well above the $5.37 of adjusted EPS that it reported last year.
Akamai’s forward price-earnings ratio is a rather low 14.9, making it one of the more affordable edge computing stocks to buy.
Fastly (NASDAQ:FSLY) Compute@Edge allows users “to build high scale, globally distributed applications and execute code at the edge — without having to manage the underlying infrastructure.” It says that the system is “faster, simpler, and more secure” than competing offerings.
In 2020 and 2021, I was upbeat on Fastly, citing its impressive customer base, powerful technology, and extremely strong online reviews. However, I became disillusioned with the stock, due to its very high valuation and a “massive outage” suffered by the company in July 2021. However, the stock’s valuation is now reasonable and the company’s business seems to have recovered from the outage. The forward price-earnings ratio of 3.5 times is fairly attractive given its rapid growth and huge potential, and analysts, on average, expect its top line to come in at $501 million this year, versus $432 million last year. And one analyst expects the company to break into the black next year with earnings per share of 7 cents.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.