Is Rackspace Hosting Among the Best Stocks to Invest In Now?

Shares of Rackspace Hosting (NYSE: RAX  ) fell more than 24% Thursday, leaving essentially no investors who believe this is one of the best stocks to invest in now.

Yet the skeptics may be overreaching. Sure, Rackspace's revenue growth is slowing, but with gross margin rising, concerns over collateral damage caused by an ongoing cloud storage price war between Amazon.com (NASDAQ: AMZN  ) and Google (NASDAQ: GOOGL  ) are probably unjustified. In the video below, Fool contributor Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova addresses these concerns.

Rackspace is down 47% year to date despite notable progress in implementing its OpenStack infrastructure, which should help to produce higher margins and profits over time. It'll take awhile for the transition to take full effect, but when it does, look out above, Tim says.

Do you agree? Watch the video to get Tim's full take, and then let us know whether you think Rackspace Hosting is one of the best stocks to invest in now.

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  • Report this Comment On May 13, 2013, at 9:41 PM, mikevr1463 wrote:

    Your comments focus 100% on investing. Are you also suggesting that holders should sell if:

    (1) Gross margins decline for two successive quarters, OR

    (2) Revenue growth declines for 2 successive quarters due to "incompete transitions" to Open Stack. How do you monitor the precise revenue that ear marks progress in this transition?

    In short, when should we sell?

    Cheers,

    Mike

  • Report this Comment On June 04, 2013, at 9:20 AM, eddiemayan wrote:

    Yes, RackSpace Hosting make us a more profitable. Just wait for 2 months Rackspace gross peak level.

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