9 Software Stocks to Buy

by Louis Navellier | December 28, 2011 1:00 pm

Of the major stock indexes, Nasdaq (NASDAQ:.IXIC[1]) has done the worst so far this year — down just over 1%. Despite the uptick in holiday shopping[2] and gadget-giving, the technology sector is still reeling from disappointing earnings forecasts[3] from big players such as Oracle (NASDAQ:ORCL[4]), which recently reported its first earnings miss in more than a decade[5]. Fortunately for investors, not all tech companies are created equal.

I watch more than 5,000 publicly traded companies with my Portfolio Grader[6] tool, ranking companies by a number of fundamental and quantitative measures. And this week, I’ve spotted nine software stocks to buy.

Here they are, in alphabetical order. Each one of these stocks gets an “A” or “B” according to my research, meaning it’s a “strong buy” or “buy.”

Cadence Design Systems (NASDAQ:CDNS[7]) is a developer of software, hardware, silicon intellectual property and other tech products. Since the start of 2011, CDNS stock has jumped nearly 24%, compared to a gain of just 5% for the Dow. CDNS stock gets a “B” for sales growth, a “B” for its ability to exceed the consensus earnings estimates on Wall Street, an “A” for the magnitude in which earnings projections have increased over the past month and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of CDNS stock[8].

Check Point Software Technologies (NASDAQ:CHKP[9]) works with technologies that secure communications and transactions over the Internet. CHKP stock is up 14% year-to-date, compared to smaller gains by the broader markets. CHKP gets a “B” for earnings growth, a “B” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of CHKP stock[10].

Electronic Arts (NASDAQ:EA[11]) is well known in the video game world for the variety of games it develops for several platforms. EA stock is up 26% year-to-date. EA gets an “A” for earnings momentum and a “B” for the magnitude in which earnings projections have increased over the past month in my Portfolio Grader tool. For more information, view my complete analysis of EA stocks[12].

Fortinet (NASDAQ:FTNT[13]) is a developer of network security appliances and network security solutions. FTNT stock is up nearly 31% year-to-date, compared to much smaller gains by the broader markets. FTNT gets an “A” for sales growth, a “B” for earnings growth, an “A” for earnings momentum, an “A” for its ability to exceed the consensus earnings estimates on Wall Street, an “A” for the magnitude in which earnings projections have increased over the past month and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of FTNT stock[14].

Intuit (NASDAQ:INTU[15]) provides business and financial management solutions. A modest gain of almost 7% year-to-date places INTU on this list. It gets a “B” for the magnitude in which earnings projections have increased over the past month and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of INTU stock.[16]

Nuance Communications (NASDAQ:NUAN[17]) is an international provider of voice and language solutions. Year-to-date, NUAN has posted a gain of 38%. NUAN stock gets a “B” for sales growth and a “B” for the magnitude in which earnings projections have increased over the past month in my Portfolio Grader tool. For more information, view my complete analysis of NUAN stock[18].

SAP (NYSE:SAP[19]) is engaged in the sale of software licenses. 2011 has been a solid year for SAP stock, boasting returns of 3%. SAP stock gets a “B” for operating margin growth, an “A” for earnings growth, an “A” for earnings momentum, a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of SAP stock[20].

Success Factors (NYSE:SFSF[21]) provides cloud-computing-based software solutions to its customers. SFSF stock has climbed 37% since the start of 2011. It gets an “A” for sales growth, an “A” for its ability to exceed the consensus earnings estimates on Wall Street and an “A” for the magnitude in which earnings projections have increased over the past month in my Portfolio Grader tool. For more information, view my complete analysis of SFSF stock[22].

TIBCO Software (NASDAQ:TIBX[23]) is an independent provider of middleware and infrastructure software. A year-to-date gain of 21% for TIBX has left shareholders pleased in 2011. TIBX gets a “B” for sales growth, a “B” for operating margin growth, a “B” for earnings growth, a “B” for earnings momentum, a “B” for its ability to exceed the consensus earnings estimates on Wall Street and a “B” for the magnitude in which earnings projections have increased over the past month and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of TIBX stock[24].

Get more analysis of these picks and other publicly traded stocks with Louis Navellier’s Portfolio Grader[25] tool, a 100% free stock rating tool that measures both quantitative buying pressure and eight fundamental factors.

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