One of the first steps to take in identifying the best tech stocks to buy is to look for industries on the verge of massive growth.
Or, as Money Morning Defense & Tech Specialist Michael A. Robinson says, "ride the unstoppable trends - that's vital if you want to amass meaningful wealth."
And one of the biggest unstoppable trends in tech right now is cloud computing.
Cloud computing is the process of storing and accessing data over the Internet, rather than on a computer's hard drive. It allows companies and individuals to access data and share data faster and more effectively.
According to Forrester Research, the cloud computing industry was valued at $41 billion in 2011 - and will grow 487% by 2020.
"Cloud computing is one of the biggest global tech trends out there today," according to Robinson. "The cloud is benefitting from the fact that companies want to keep a lid on their computing costs by outsourcing data centers to third-party vendors."
Cloud computing firms assume the costs of purchasing and maintaining data storage equipment.
"We're talking about a $241 billion market at the end of this decade versus just $41 billion three years ago," Robinson said. "The cloud is the future of computing in the United States and globally."
With the cloud computing industry growing at an astounding rate, here are three stocks to buy to start profiting today...
Cloud Computing Stocks to Buy Now
The first stock Robinson recommends actually gives investors a play on two companies.
EMC Corp. (NYSE: EMC) is a global leader in the cloud computing field, and it also owns the spin-off company Pivotal Inc., which is becoming a major player in the Internet industry.
"EMC makes some of the very best hardware for mass-data storage," Robinson said. "And it's actually gaining market share, a tough feat for a sector leader that's usually the target of all the other sector upstarts."
According to the International Data Corporation, EMC owns more than 30% market share of the storage hardware segment, which is more than two and a half times the market share of its nearest competitor NetApp Inc. (Nasdaq: NTAP).
The stock has an operating margin of 19% and a return on stockholders' equity of 13%. Additionally, quarterly earnings were up 17% in its last quarterly report.
With the spin-off company Pivotal Inc., investors also get a play in the "Big Data" industry, an area Robinson relates to cloud computing in terms of profitability. Pivotal is not yet public, but is primed for an IPO. Until then, Robinson recommends playing the company by purchasing EMC stock.
EMC stock is up 7% in 2014 and more than 23% in the past 12 months.
While EMC is one of the stocks Money Morning experts have pinpointed in the cloud computing field, these other two stocks also have the potential to bring major profits...
Mitel Networks Corp. (Nasdaq: MITL) is a Canadian company that works with small and medium-sized businesses. Mitel is a communications and collaboration software company that allows its clients to communicate through hosted data centers. That's where cloud computing comes in.
One of the main reasons why Robinson recommends MITL stock is the $370 million merger with Aastra Technologies that the company completed in January.
"The [merger] solidifies its position in cloud computing and gives Mitel an annual sales rate of around $1.1 billion," Robinson said. "It also means the combined firm now has 60 million users around the world and makes Mitel the market leader in Western Europe."
MITL stock is up an impressive 162% in the last 12 months, but has an affordable share price of just over $9.40. That price is what really caught Robinson's eye.
"Many institutional investors won't touch a stock below $10, or may be restricted from doing so," Robinson said. "At its current price Mitel has become 'institutional grade,' which should increase demand for the stock as more pros invest.
Finally, the third cloud computing stock to buy has been on the radar of Money Morning's Executive Editor Bill Patalon.
Investors probably know SanDisk Corp. (Nasdaq: SNDK) for its USB flash drives, micro SD cards, and MP3 players, but the firm has been pushing into different markets, including cloud computing. The company's "CloudSpeed" enterprise SSDs (Solid State Drives) are used in cloud computing and data storage solutions.
A recent report from the research firm Trefis stresses the importance of cloud computing and SSDs for SanDisk.
"With user data increasingly moving to the Cloud, storage demand from data centers is increasing," the report says. "Over the next few quarters, the company expects the contribution of SSDs to go up to around a quarter of its net revenue due to the expected growth in enterprise storage demand and its new products. If the company meets its expected target, it would provide a substantial boost to earnings."
SNDK stock has gained 20% in 2014 and 62% in the last 12 months. And according to Patalon, SNDK stock still has room to run, making it among the best cloud computing stocks to buy now.
Have you invested in the cloud computing industry? Are there any other cloud computing stocks you are tracking? Join the conversation on Twitter @moneymorning using #Cloud.
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