Have you watched the “Yellowstone”, the TV series set in Montana? I am addicted to the show because it is about two of my favorite things: Montana and cowboys.
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| SOURCE: Paramount Network |
I started watching the series in March when the shelter-at-home orders first came down. And it wasn’t my only guilty pleasure. I think I watched more movies in the month of March than the in the last 10 years combined!
I’m not alone. Streaming has skyrocketed considering other forms of entertainment have been canceled until further notice.
Internet usage skyrocketed when all of us were in shelter-at-home lockdown mode. Americans were watching Netflix movies, YouTube videos, TikTok dance clips and generally surfing the heck out of the internet in droves.
Before the coronavirus, the average household used 320 GB of data, but that jumped to 403 GB in March, a stunning 25% increase.
Internet traffic has since dropped a little as some states lifted shelter-at-home orders, allowing millions of Americans to return to work. Despite this, it has stubbornly remained at a higher plateau ever since.
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| SOURCE: WallStreetJournal |
Internet traffic comes in two basics forms: downstream and upstream.
Downstream broadband is what we use to watch movies and TV shows, like Yellowstone. But that’s not where your focus as an investor should be.
Instead, what is very worth noting is the dramatic increase in the use of upstream broadband, which is used for things like video conferencing.
Upstream data consumption has jumped by 56% in the second quarter of 2020 — more than twice as much as the overall internet usage increase mentioned above.
As an investor, you should be asking yourself what companies are profiting from this surge in upstream internet traffic.
Zoom Video Communications, Inc. (Nasdaq: ZM, Rated “C”) has gotten lots of well-deserved attention, but Alphabet Inc.’s (Nasdaq: GOOGL, Rated “B”) Meet Teleconferencing and Microsoft Corp.’s (Nasdaq: MSFT, Rated “B+”) Skype and Teams services offer vastly superior video conferencing services, in my opinion.
At Weiss Research, we looked at all the options and are very satisfied users of Microsoft Teams.
That being said, competition will be fierce, so here are four business communication up-and-comers that could see their businesses explode:
Ring Central, Inc. (NYSE: RNG, Rated “D+”) is more than just a video conferencing service. Ring Central is a pioneer in UCaaS (Unified Communications as a Service), which is a one-stop service that combines voice, video and messaging into a single platform.
8x8, Inc. (NYSE: EGHT, Rated “D”) is also a UCaaS provider, but it has managed to become the darling of small businesses. Currently 82% of its customers are those with less than $1 billion in annual revenues.
Slack Technologies, Inc. (NYSE: WORK, Rated “D”) is revolutionizing the way workers communicate by email with a new instant messaging collaboration platform that enables remote workers from all over the world to seamlessly and instantly communicate with each other.
Dropbox, Inc. (Nasdaq: DBX, Rated “D”) began as a cloud-based storage system, but has morphed into a cloud-based collaboration platform that integrates other cloud-based services such as video communications and collaboration software.
And boy is Dropbox making money. Earnings have increased for eight straight quarters AND exceeded estimates in each of those.
Despite the upside these picks have, I’m not suggesting that you rush out and buy any of these four stocks right now. As always, timing is everything.
But the growing increase in upstream data traffic is one of the most powerful, most consistent and most profitable investment trends that you can invest in right now.
Best wishes,
Tony Sagami
