Building Wealth Over $1 million...
That's how much our publisher paid a single company to help us manage our sales and customer relations last year.
And we would likely pay double that price if we had to. It's that vital to our success.
The company we paid all that money to is Salesforce (CRM).
Many of you have likely heard of Salesforce. But if you haven't, it's the top developer and seller of customer relationship management software. Salesforce has been a tremendous growth story as its revenues have tripled since 2015.
But Salesforce's software isn't the only reason the stock is up 1,000% over the past decade... It's how the company delivers its software.
Rather than pay thousands of dollars for software to be installed like the old days, you can access Salesforce's software over the internet. It uses the "cloud."
Salesforce.com is simple to use. It can be accessed anywhere, as long as you have an internet connection. It's perfect for this new age of professionals that work from home.
And the beauty of Salesforce's business is that nearly 95% of its revenues come from subscriptions. When you provide a product that can be accessed anywhere and is simple to use, you'll have a lot of renewal revenue.
Salesforce has been such a success because it uses a model called Software as a Service (SaaS).
Two weeks ago, I talked about the cloud and how my No.1 stock pick of 2020 would benefit from it. But I was talking about a different kind of cloud than what Salesforce uses... I was bullish on Infrastructure as a Service ("IaaS").
Now, if your head is starting to hurt because of all the "as a services" being thrown around, I'll explain the difference.
SaaS is software that's hosted through the web, rather than an installed application. Think of companies like Salesforce and Dropbox.
IaaS is where companies rent out computing power through the cloud, rather than building servers themselves. Think of businesses like Amazon Web Services or Google Compute Engine.
As an example, Salesforce – a SaaS company – runs many of its cloud services on Amazon Web Services – an IaaS company. As SaaS continues to get more popular, it will bring more demand for IaaS. That's why we're so bullish.
As for your money... both are great investments. You'd do very well by investing in a basket of SaaS stocks and IaaS stocks.
There are a few differences between the two cloud groups, though.
First, we think there will only be a few big IaaS winners. As we said previously, "Since it costs billions of dollars to build cloud infrastructure, there are only a handful of companies that have significant market share. The companies that dominate the market now will likely continue to dominate in the years ahead."
We already have a good idea about which IaaS companies will succeed. It's about buying them and holding them over the long term...
SaaS is a little different.
It doesn't take as much money to make software as it does cloud infrastructure, so there will likely be many big winners in the SaaS space. We've already seen some incredible gains with SaaS companies like Salesforce.
SaaS, by far, has been the hottest sector in the market. Since 2004, SaaS companies have produced an average annualized return of 44%. That crushes technology stocks, which were up 14% a year... and even the broader category of software companies, which only gained 19% a year.
The key to investing in SaaS stocks is to put your money in them before they hit the mainstream media.
I know, I know... Easier said than done, right?
But if you are able to find these type of SaaS opportunities early, you could potentially have thousand-percent winners.
That's why I recommend you pay attention to Stansberry Venture Value editor Bryan Beach. Bryan recently recommended "Three Hidden SaaS Stocks With Up to 3,000% Potential."
And if the market does explode higher from here (Steve's "Melt Up" thesis), the stocks Bryan has hand-picked will have a great shot at soaring. Bryan helped put together a short video explaining just how attractive the SaaS sector is and how to find out the names of his three favorite SaaS stocks.
What We're Reading...
- My No. 1 stock pick for 2020.
- Defining IaaS, PaaS, and SaaS.
- Something different: Screening for coronavirus at 20 U.S. airports.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
January 29, 2020