Are These The Top Software Stocks To Buy Today?

Software stocks have seen a meteoric rise in valuation recently. As more companies go digital and move their infrastructures to the cloud, top software stocks will no doubt enjoy substantial growth. We see how software companies like Zoom (NASDAQ: ZM) and Adobe (NASDAQ: ADBE) have grown over the last year thanks to a spike in demand for their software and services. In fact, the industry enjoyed such growth that many software companies decided to go public amid the pandemic. 

Software companies with a focus on work-from-home products have been beneficiaries of the global pandemic. The reality is that our demand for software and its related services will still be on a high for the months and possibly years to come. As companies begin to adapt to this pandemic era, the likelihood of going back to how things were pre-pandemic is getting slimmer. Therefore, investors who are looking for the best software stocks to buy [or sell] now so they can capitalize on this market momentum. With that in mind, here are the top software stocks to consider buying this month.

Top Software Stocks To Buy [Or Sell] Now

  1. Cloudflare Inc. (NYSE: NET)
  2. Twitter Inc. (NYSE: TWTR)
  3. Datadog Inc. (NASDAQ: DDOG)
  4. Dexcom Inc. (NASDAQ: DXCM)

Cloudflare Inc.

Cloudflare is a web infrastructure and website security company that is based in California. The company specializes in providing content delivery network services, DDoS mitigation, and internet security to name a few. Also, the company claims that approximately 16% of Fortune 1,000 are paying Cloudflare customers. Cloudflare will announce its fourth-quarter fiscal today. With NET stock up over 20% this year, investors clearly have much to look forward to.

In the company’s third-quarter financials, it posted total revenue of $114.2 million, which is a 54% increase year-over-year. Cloudflare also reported a strong large customer growth, adding a record of roughly 100 net larger enterprise customers in the quarter, in addition to its first $10 million annual recurring revenue (ARR) customer. The company also ended the quarter with $1.05 billion in cash.

software stocks (NET stock)
Source: TD Ameritrade TOS

Our third quarter represented many significant milestones including surpassing $100M in revenue, crossing 100,000 paying customers, and releasing more than a dozen new products and features,” said Matthew Prince, co-founder & CEO of Cloudflare. With such impressive financials, will you consider buying NET stock ahead of its financials?

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Twitter Inc.

Twitter is a microblogging and social networking service in which users can post and interact with messages known as “tweets”. The company is an open service that is home to a world of diverse people, perspectives, ideas, and information. TWTR stock rose by 13% on Wednesday. This came after the company announced its fourth-quarter fiscal on Tuesday. 

In it, the company reported that its monetizable daily active usage increased by 27% year-over-year at 192 million users. Twitter also reported a strong finish to the year with a revenue of $1.29 billion, up by 28% in the same period. It reflects better-than-expected performance across all its major products and geographies. In the quarter, the company also made significant progress in its brand and direct response products.

best software stocks (TWTR stock)
Source: TD Ameritrade TOS

Its strong ad revenue came from mobile app promotion as it brings a new ad format, stronger attribution, and improved targeting. This resulted in a 31% year-over-year increase in total ad revenue. Twitter also said that growth from product improvements reached an all-time high, with additional benefit from an increased global conversation around the coronavirus, the run-up to the U.S. elections, and other current events. With so many good things happening to the company, is TWTR stock a top software stock to buy?

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Datadog Inc.

Datadog offers a monitoring and security platform for cloud applications. The company provides end-to-end traces, metrics, and logs to help make applications, infrastructure, and third-party services entirely observable. These capabilities would then help businesses secure their systems, avoid downtime, and ensure customers are getting the best user experience. DDOG stock has been up by over 25% year-to-date. The company will report its fourth-quarter fiscal today.

How has the company been doing financially? In its latest quarter financials posted in November, the company reported that its revenue grew by 61% year-over-year to $155 million.  The company also saw its larger customers ($100,000+) grow by over 52% to 1,107 compared to a year earlier. The company certainly demonstrates continued high growth at scale.

Software stocks to buy now (DDOG stock)
Source: TD Ameritrade TOS

As the pandemic has driven organizations globally and across industries to prioritize their digital operations like never before, Datadog will continue to be a trusted partner in enabling this digital transformation and cloud migration. All things said, will you add DDOG stock to your portfolio?

[Read More] Looking For The Best Health Care Stocks To Buy This Month? 4 To Consider

Dexcom Inc.

Dexcom is a company that develops and manufactures monitoring systems for diabetes management. In detail, the company is based in California and integrates its software and products for patients to have a real-time look at their glucose readings. Through its continuous glucose monitoring systems, allows for easier diabetes management decisions and will provide crucial information for patients. Dexcom will post its fourth-quarter financials after today’s closing bell as well.

top software stocks to watch (DXCM stock)
Source: TD Ameritrade TOS

Last month, the company reported its preliminary and unaudited revenue for its fourth quarter. The company says that it will meet or exceed $567 million, which is an increase of 23% year-over-year. For its fiscal 2020, the company’s total preliminary revenue is expected to meet or exceed $1.925 billion, a 30% increase from a year ago.

CEO Kevin Sayer had this to say, “Dexcom demonstrated its resilience in the face of the unique challenges of 2020, delivering revenue growth of nearly $450 million over 2019 and making several significant steps to extend our growth opportunity well into the future. I am incredibly proud of the work of our teams and want to express my gratitude to our employees for prioritizing the care of our customers and service to our communities throughout the year.” Will you consider buying DXCM stock for these reasons?


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