Are These Software Stocks Worth Buying Right Now?
Software stocks are one of the best performers of the year so far. Given how they have proliferated from businesses shifting online, it comes as no surprise. With digital acceleration happening at unprecedented speeds, the demand for software has never been greater. From data centers and cybersecurity to cloud computing and artificial intelligence (AI), software companies were able to facilitate this change in consumers and businesses alike. With the advent of the pandemic last year, many companies were forced towards digital acceleration. As the valuations of these software companies reach all new highs, many investors have been on the lookout for some of the best software stocks today.
Notable examples of software stocks that brought substantial returns to investors include Zoom (NASDAQ: ZM) and Twilio (NYSE: TWLO). Both top software stocks have brought returns of over 200% in the last year. With U.S. stock futures pointing to a further tech sell-off on Wall Street today, could this be an opportunity for investors to buy software stocks on the dip? The sell-off seems to come from market participants weighing up signs of economic recovery against fears of inflation. However, given that companies who have invested heavily in the services from these software companies are here to stay, the demand for software products and services could very well show further growth. With that in mind, here are the top software stocks to consider adding to your portfolio.
Best Software Stocks To Buy [Or Avoid] Now
- McAfee Corp. (NASDAQ: MCFE)
- PubMatic Inc. (NASDAQ: PUBM)
- Box Inc. (NYSE: BOX)
- Nvidia Corporation (NASDAQ: NVDA)
McAfee is a global computer security software company that is based in California. It creates enterprise and consumer solutions that make the world a safer place. The company uses a holistic, automated, and open security platform to build security solutions for its customers. McAfee customers range from government agencies to millions of home users. With over 680 million total endpoints and over 50,000 enterprise customers, the company certainly caters to a wide customer base. The company’s shares are up by 7.10% at Wednesday’s close after stellar fourth-quarter financials.
In it, McAfee reported a consumer revenue growth of 23% year-over-year, at $426 million. Its full-year revenue was an impressive $1.6 billion, up by 20% compared to a year ago. Its core direct-to-consumer subscribers increased by 18% to 18 million. The company attributes this growth to its ability to secure its customers’ ever-increasing digital footprint. This makes sense as people are living more of their lives online these days. The company also announced a five-year extension with electronics giant Asus (OTCMKTS: ASUUY) for consumer security services across their product portfolio. This would certainly play well for McAfee in the years to come. All things considered, will you buy MCFE stock?
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PubMatic is a software company that provides a specialized cloud infrastructure platform that enables real-time programmatic advertising transactions. Its technology and infrastructure provide superior outcomes for both internet content creators and advertisers. Like McAfee, the company also reported its fourth-quarter financials yesterday, much to investors’ delight. PubMatic’s shares are up by over 30% as of 4:00 p.m. EST.
In its latest quarter, PubMatic reported revenue growth of 64% year-over-year at $56.2 million. Its net income for the quarter was $18.8 million or $0.34 per diluted share. Furthermore, the company ended the quarter with $101 million in cash. PubMatic seems to be firing on all cylinders as it reported a record quarter. The company certainly has an edge across the digital advertising ecosystem given how successful its quarter has been. It also reports that its buyer-supply path optimization relationships are expanding, and it is gaining market share in the global digital advertising market. With so many exciting developments surrounding the company, will you buy PUBM stock?
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Box is a leading Cloud Content Management platform that caters to organizations to accelerate business processes and protect their most valuable information. Its platform is similar to Alphabet’s (NASDAQ: GOOGL) Google Drive but is focused on large enterprises. BOX stock has been up by over 10% since Tuesday and currently trades at $19.14 at the close on Wednesday. This latest rally seems to be coming from a report that Starboard Value may seek three additional Board seats.
In the report, sources claim that hedge fund Starboard Value wants Box to improve its business if it does not want a battle over three Board seats that are up for election this year. The fund initially took a stake in BOX stock back in 2019 and is a known activist investor that pushes for changes to increase shareholder value. Could this be the start of change in Box’s performance in the stock market? The company has barely risen when compared to gains seen by other software companies in the S&P 500. Given the news of a potential board change, will you consider buying BOX stock?
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Nvidia is a multinational technology company that is based in California. Despite being famous for the graphics processing units (GPU) that it makes, the company also invests heavily in AI, data centers, and self-driving cars. Tapping into decades-long experience in high-performance computing, imaging, and AI, Nvidia has built a software-defined, end-to-end platform for the transportation industry. Its software enables continuous improvement and deployment through over-the-air updates. The company is set to announce its fourth-quarter financials after today’s closing bell.
Investors are definitely looking forward to Nvidia’s upcoming financials since it has launched its latest generation of GPUs. The RTX 30 series of GPUs have taken the world by storm and demand has skyrocketed since its launch in September. With cryptocurrency prices at an all-time high recently, the company does seem to be struggling with demand. To address this issue, the company signed a multi-million dollar manufacturing deal with Samsung (OTCMKTS: SSNLF) last December to increase its production of GPUs. With so much to look forward to in Nvidia, will you consider NVDA stock as a top software stock to buy?