Wed Mar 05 2014
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3 Stocks to Benefit from Big Data in 2014

Big Data was one of the biggest buzz-words in the technology sector in 2013. The term refers to management of vast quantities of unstructured data, i.e. information available from messaging, emails, open source surveys, blogs, Twitter (TWTR -Snapshot Report) tweets, Facebook (FB – Analyst Report) and many other sources.

Traditional Relational Database Modelling Systems (RDBMS), storage and analytic solutions are not capable of handling the vast quantity of unstructured data due to its high velocity and real-time consumption pattern. This calls for specialized non-relational databases like Hadoop and NoSQL. Traditional query languages such asMicrosoft (MSFT – Analyst Report) SQL are also giving way to Map Reduce.

Apart from data modeling, storage of this unstructured data has become a major problem. Big Data storage needs to be able to handle capacity and provide low latency for analytics work. Flash memory is gaining ground against traditional hard drives due to significant performance advantage and low power consumption.

Moreover, usage of flash in cloud storage that involves pooling of shared resouces is increasingly gaining popularity. Simultaneously, demand for analytics solutions that can analyze this vast unstructured data and unlock its value has increased in recent times.

Big Data Goes Mainstream in 2014

We believe enterprises will stop experimenting with Big Data and focus on adopting the technology, unlocking significant growth potential in 2014. The continuous extraction of data, efficient storage and its simultaneous analysis will lead to a quick and efficient decision-making process. This will improve the efficiency of enterprises.

According to market research firm IDC, Big Data is expected to generate $ 16.1 billion in 2014, growing 6 times faster than the overall IT market. The firm also forecasts that the Big Data-related technology and services market will continue to grow at a 27% CAGR to $ 32.4 billion through 2017.

The growth forecast is significant considering the fact that Big Data projects need to have a long-term horizon to deliver substantial results and involve significant investment. Moreover, the acute shortage of skilled Big Data professionals (Data Scientists) is a major headwind for enterprises.

Per IDG, on average, enterprises are expected to spend $ 8.0 million on Big Data-related initiatives and programs in 2014. We believe that this higher enterprise spending will be beneficial to vendors supplying Big Data solutions (software, hardware and services) in the long run.

3 Stocks to Benefit from Big Data Adoption

Amid a horde of Big Data solution providers here are three stocks expected to post significant growth due to adoption increases in 2014.

Fusion-io Inc. (FIO – Snapshot Report) – The growing usage of flash memory for Big Data storage bodes well for Fusion-io, going forward. The company’s Fusion ioDrive 2 server flash memory continues to gain traction in Big Data projects that use Oracle NoSQL database. Fusion-io continues to launch products that are expected to drive top-line growth, going forward.

Moreover, the company’s focus on lowering costs is a significant positive. Year-to-date, the shares of this Zacks Rank #2 stock have increased 11.2%. Fusion-io’s earnings per share are expected to increase 25.2% over the next five years.

IBM (IBM – Analyst Report) – Big Data is one of the growth initiatives of IBM. The company recently refurbished its Big Data Analytics portfolio and continues to invest significantly in acquiring related patents, which will give it a head start against peers.

IBM is also investing $ 1.0 billion in Watson Group, which will focus on developing cloud-delivered big-data services to the market. The company recently acquired Cloudant that extends its data management capabilities with a NoSQL database-as-a-service (DBaaS) for web-scale and mobile applications.

Although IBM carries a Zacks Rank #3 (Hold), its earnings per share are expected to increase 8.5% over the next five years. We believe that IBM remains well positioned to gain from Big Data explosion in the long run.

Oracle Corp (ORCL – Analyst Report) – IBM’s nearest competitor in the Big Data space, Oracle aims at providing a complete solution set for enterprises that includes software, hardware and services. In 2013, the company introduced Oracle Big Data Appliance and Oracle Big Data Connectors, which are integrated to fulfill Big Data requirements.

Like IBM, Oracle is also investing in acquisitions to take advantage of the Big Data growth opportunity. The company recently bought Big-Data startup BlueKai for approximately $ 400.0 million.

Oracle also sports a Zacks Rank #3 (Hold) but has a better long-term earnings per share growth forecast of 11.2%.

Conclusion

Big Data’s stupendous growth opportunity will attract established players as well as new entrants. This will intensify competition, going forward. However, we believe that companies with complete infrastructure solutions will dominate the market in the long run.

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