With no positive news from the Nasdaq and tech sector yet this year, many analysts are worried the market could collapse. This year, stock markets have been on a roller coaster with jumps and drops brought on by the specter of rising interest rates. The U.S. central bank raised rates to counter high inflation in recent years, motivated by its primary concern of price instability. Software stocks suffered the heaviest setbacks.
Software stocks are the most popular stock in the market. They have great potential to grow in the future and provide investors with high returns.
The software industry is expected to grow at a higher rate than any other industry. The software stocks are also likely to continue their growth, making them an attractive investment option for investors.
It is important to think about stocks within companies and technical terms that are used in the industry. Stock prices for tech companies have come down even further and many of them could trade at bear-market levels. This is probably due to a pullback in the value of popular technology companies.
Stocks are one of the most common investments in today’s financial markets. There are a plethora of software companies that have yet to be profitable but offer the potential for handsome returns if they succeed where others fail, which means buying these stocks could make you rich! In this article we will discuss some good candidates with strong fundamentals and low prices at present — so don’t wait too long before investing your money into them.
Some of the software stocks out there that warrant your attention are:
- Microsoft (NASDAQ:MSFT)
- Meta Platforms (NASDAQ:FB)
- DocuSign (NASDAQ:DOCU)
- Roblox (NYSE:RBLX)
- Robinhood (NASDAQ:HOOD)
- Zillow (NASDAQ:ZG)
- Salesforce (NYSE:CRM)
- Netflix (NASDAQ:NFLX)
Software Stocks to Snap Up: Microsoft (MSFT)
Microsoft is a company that has been around for over 40 years now. It has grown to become one of the most valuable companies in the world.
Microsoft has always been a company at the forefront of innovation, with their latest products bringing major advances in technology. The success stories from Microsoft’s enterprise-level product line are countless and span every industry imaginable; they’ve even recently made an impact on our everyday lives as consumers.
Microsoft’s success in the financial markets results from its innovative products and services. The company has generated high recurring revenue through them, which ensures that they will be profitable for several years to come.
Microsoft recently reported excellent fiscal year 2022 second-quarter earnings. EPS came in higher than analysts had forecast, and that stands for good reason. Revenue also surpassed analyst expectations, symbolizing strong performance from the company’s efforts. Microsoft Intelligent Cloud’s revenue grew by 26% from the previous year. It was the driving force of the quarterly results. However, Microsoft’s gaming revenue rose 8% overall for the year. However, this is the slowest change the company has shown since reporting a decline in the third quarter of 2020.
Microsoft is spreading its wings through video game offerings with the recent acquisition of Activision Blizzard (NASDAQ:ATVI). They’re going for bigger and better things now, which is a good thing. When this deal is approved and closed, it will be Microsoft’s largest acquisition to date. Therefore, this is one of the best software stocks out there.
Meta Platforms (FB)
Meta Platforms’ flagship site, Facebook, has grown so fast because it offers a platform where people can share their content or create content for others to see. The site also features games, videos and other interactive features that keep people coming back daily. However, along the way, it has also ruffled a few feathers.
Facebook has 2.91 billion monthly active users. It has been in headlines for violating its users’ privacy and sharing their personal information with third-party companies. It is an excellent marketing tool for individuals and businesses alike, but it can be difficult to get noticed on the platform without spending a lot of money or time.
The company has been accused of being too focused on maximizing revenue rather than giving back to its community. However, Facebook does have some features that make it easier for content creators to promote themselves and get more followers, such as boosting posts.
Over the last year, most of the headlines concerned with the former Facebook have to do with the metaverse. Metaverse content consumption is still in its early days but it could take around five to 10 years until people are using the technology and experiencing it firsthand, according to Mark Zuckerburg. But some aspects of the metaverse exist even today.
There are opportunities to take advantage of right now with innovations in technology, namely broadband internet speeds, VR headsets and always-online worlds. Early adopters feel the benefits already. It may not be available to everyone yet, but it has tremendous use cases. Therefore, the potential is immense and FB stock will continue to do well in coming quarters.
Software Stocks to Snap Up: DocuSign (DOCU)
DocuSign is a digital signature service that helps people sign, send and receive electronic documents. It offers many benefits, such as increased security and efficiency, alongside less paperwork. Automating tasks to make work easier and less time-consuming for humans is a trend that is becoming more popular. With the help of automation, we can now recycle more and reduce our carbon footprint.
ESG investing is becoming increasingly popular as companies realize the importance of being socially responsible and environmentally conscious. Under these circumstances, DocuSign becomes an excellent investment.
During the pandemic, DocuSign experienced a sharp spike in usage. Managing electronic agreements is a complicated task. It requires a lot of paperwork and time, which is why many companies are turning to AI-enabled assistants.
DocuSign is an example of this. It automates the process of sending, receiving and reviewing documents. This allows companies to get their work done without spending their time on this tedious task. Covid-19 is providing positive momentum, which is creating demand for the company’s subscription model. However, usage has leveled off as things have gotten back to normal. That makes sense, with more people going back to the office.
Even though the effects of covid-19 are still new, companies are likely going to start having specific rules about how people may or may not sign off on documents in the future. Remote approval can be common in a lot of companies now that there is increasing use of document-signing platforms such as DocuSign. Therefore, this is a great long-term investment among software stocks.
Roblox is an online game platform that allows users to create their games and play them with other players worldwide through virtual reality, augmented reality and mobile devices.
Roblox’s IPO went live in March last year and is now trading under the ticker symbol RBLX. The company’s stock was $69.50 each, leading to a market cap of $38.26 billion. Roblox went public through a direct listing, which has become a popular way to go public, especially among prominent tech stocks.
Shares of the kids gaming app began trading at $64.50, which is 43% higher than what the company sold shares for in January’s private funding round. Share value had reached a record high of $45.3 billion as of its closing time.
After a fantastic debut, Roblox stock lost a bit of steam. And it makes sense why. People are returning to their normal routines, and people have less time to spend online. But the metaverse will allow us to seamlessly move from one virtual world into another. But it’s more than just a physical place, there are also social and economical aspects that make this experience immersive. In such a situation, Roblox will continue to do well.
Roblox just made a huge announcement that will allow players to build, manage and even run their own NFL teams. They also had an impressive year, recording a 108% year-over-year increase in revenue for the whole calendar year. Altogether, things are going in the right direction for the company.
Software Stocks to Snap Up: Robinhood (HOOD)
On the eve of 2020, there was a perfect storm in retail trading. There was a surge of activity with traders for the first time joining markets to profit off of opportunities that otherwise wouldn’t exist. First-time traders, who were on the sidelines for years because of high prices, found other types of investments more accessible. The stock market became more popular when apps like Robinhood became more popular. It almost felt like sports betting was replaced with stock trading.
Stock prices plummeted and many new investors opened their Robinhood accounts. Robinhood has been successful due to its high-quality service, rapid user growth & thoughtful marketing. It was founded by the promising entrepreneurs Vladimir Tenev and Baiju Bhatt in 2013 and by 2021 had amassed 22.4 million users.
In no time, Robinhood became a big brand online, getting traction and increasing its awareness, unlike other traditional brokerages. While apps like Webull and Dough have been around for a while, they haven’t created the same level of brand popularity as Robinhood.
Not only are Robinhood’s user-friendliness and speed-of-access a big draw for millennials, but they also allow young investors to manage their finances in a way they hadn’t been able to before. Silicon Valley is where the app was released and aimed at young people who have never traded before. The app’s frictionless interface and ‘game-ified’ features helped them achieve this goal.
Zillow is a marketplace for property listings. It’s based in Seattle, Washington. The company was founded by Rich Barton, Lloyd Frink in 2006. The company offers a range of services for home buyers and sellers, including Zestimate, Zillow Rentals and Zillow Offers.
ZG Stock went up after posting better-than-expected results. Although there was progress with their recent iBuying sale, the exit process was very complicated and took more time than originally planned. However, the company managed its inventory very well, selling it off at great prices.
Zillow reported revenue of $3.9 billion for the fourth quarter, a 392% increase from one year ago. Adjusted Ebitda was a loss of $434,000 this quarter, compared to a gain of $170 million last year. Revenue was $6 billion for the full year, up 250% from last year. Adjusted Ebitda was $194.6 million for the period.
The company attributed its success to the strength of the Offers segment, which had revenues up 1,000% from last year. Despite the challenges, Zillow noted that the wind-down of their iBuying business had progressed quickly. The company is selling homes faster than they had anticipated. This means they have superior units on most properties and this has led them to an abundance of profits.
Zillow’s CEO, Rich Barton, believes in strong fundamentals and steady growth. The company has made record profits for months now and has “major untapped business potential,” Barton said.
Software Stocks to Snap Up: Salesforce (CRM)
Salesforce is a customer relationship management software that helps sales, marketing, and service teams to organize leads, track the status of opportunities and close deals.
It provides a wide range of automation tools to help businesses run smoothly. Salesforce is a platform that has allowed businesses of all sizes to grow. Salesforce began in 1999 and has continued to innovate and improve.
It’s impossible to talk about Salesforce without mentioning their impressive, world-renowned growth. A major driver of this was the company’s acquisition strategy — integrating exciting new technologies into its platform for everyone, including customers, so that they could benefit from them too. This has catapulted CRM leader status beyond being just a provider.
For example, most companies adopted a remote working model or at least a hybrid work model during the pandemic. Using tools like Slack is critical in keeping up-to-date conversations going while still being productive at work. That’s why Salesforce completed its $27.7 billion Slack acquisition last year. Salesforce has announced plans to integrate Slack with its customer 360 platforms. This allows companies to connect different sources of information and support for efficiency purposes.
The other major acquisition for Salesforce is data visualization company Tableau for $15.7 billion. Salesforce wants to be the best in every category of their ever-expanding platform, and it makes sense that the number one analytics platform was on their to-do list.
Overall, investors did not like that the company was paying so much for these acquisitions. However, on the bright side, it diversifies the revenue stream greatly and sets up CRM for a lot of success moving forward.
Netflix has helped transform how we watch TV shows and movies with its original content. As a result, Netflix has seen an explosive increase in subscribers worldwide.
However, more recently, investors have been worried about saturation. The company is already numero uno in the States, so most of its growth will come from overseas. That is why the streaming service is investing billions in overseas ventures. Some of the company’s biggest hits, such as Squid Game and Money Heist, are made outside North America. Therefore, the strategy to invest in foreign markets makes sense.
Overall, despite the competition, Netflix remains the biggest name in town. Moving forward, it will have to contend with a host of new and traditional media companies coming to the forefront to challenge its status. However, Netflix remains the top choice for streaming TV and movies. People love it for its simple interface, lack of commercials and a wide selection of popular network shows and original content offered.
On the publication date, Faizan Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.