Looking For The Best Software Stocks to Buy? Here’s 3 For Your List.
Software stocks have had an amazing year in the stock market. You could say they have taken the world by storm. With the coronavirus pandemic ravaging many industries this year, top software stocks seem to have set themselves apart from the rest. Why is that so you may ask? It is simply because more companies have either shifted online or amplified their digital presence. This is a vital move for businesses to continue after all. With more people staying at home and a new wave of restrictions as coronavirus cases rise in the U.S., the demand for software companies has never been greater.
For instance, Zoom Video Communications Inc. (ZM Stock Report) could be the biggest winner in the software industry today. Despite a 17% drop in share price since late November, the company is still up by over 470% year-to-date. In the span of a year, Zoom has now become a household name and is synonymous with teleconferencing. The company’s teleconferencing software could fill a consumer need that came with the pandemic and has now reaped the rewards from this scenario. Many other software companies have followed a similar trend. Salesforce.com (CRM Stock Report) is another software company that has had a stellar performance this year.
Also, there is a good chance that the software industry will continue to grow. Even with a vaccine on the way, the pandemic has certainly changed the way we interact and do business. We no longer need to be present at work to be able to get work done. This applies to a good majority of jobs at the very least. With that in mind, here are 3 software stocks to watch this month.
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Top Software Stocks To Buy [Or Sell] Now: Adobe Inc.
One software company that has shown no signs of stopping is Adobe (ADBE Stock Report). The company is the brains behind some of the best document management and creativity software in the world. Be it an engineer, designer, or content creator, chances are you have used Adobe software. The company’s share price is up by over 70% since the March lows. What could investors expect ahead of its fourth-quarter fiscal posting tomorrow?
Adobe has shown resilience as it overcame the odds in a stock market that was badly hit by the pandemic. In its third-quarter fiscal posted in September, the company certainly brought good news to investors. It reported a revenue of $3.23 billion, a 14% increase compared to a year earlier. Unsurprisingly, a huge chunk of this revenue came from its Digital Media segment at $2.34 billion. Within that, Creative revenue was $1.96 billion. The company also posted a diluted earnings per share of $1.97, representing a 22% increase year-over-year.
Much of the company’s success is for converting into a Software as a Service (SaaS) model. By utilizing a SaaS model, it allows for users to pay a monthly subscription to have access to Adobe’s wide range of software. The company announced on Monday that it has completed the acquisition of Workfront. Workfront is a leader in work management platform for marketers and has over 1 million users. Both companies have strong product synergies and have shared customers like Home Depot (HD Stock Report) and Nordstrom (JWN Stock Report). With such exciting developments surrounding Adobe, will you consider adding ADBE stocks into your portfolio?
Top Software Stocks To Buy [Or Sell] Now: Oracle Corporation
Oracle (ORCL Stock Report) is a multinational computer technology corporation headquartered in California. The company sells database software, cloud engineered systems, and enterprise software products. Oracle’s share price is up by over 40% since the March lows and traded at $59.73 as of 4:00 p.m. ET. The company, like Adobe, will announce its earnings tomorrow.
So how has the software company fared in 2020? By looking at its latest quarter fiscal posted in September, you might get a clearer indication. The company reported an impressive total revenue of $9.4 billion in this quarter, beating its revenue guidance by more than $150 million. Oracle also posted an earnings per share of $0.72, a 16% increase year-over-year. The company expects its revenue to accelerate even as it moves on past the coronavirus pandemic. Impressively, Oracle’s cloud application and infrastructure businesses continue to grow rapidly.
Company CTO, Larry Ellison says that “Oracle Cloud offers better Infrastructure-as-a-Service (IaaS) technology than any other cloud vendor,” Rightfully so as Oracle’s IaaS received the highest satisfaction score in 2020 from a survey by International Data Corporation (IDC). The attractiveness of Oracle is that management still has levers to pull. By cutting into operating costs, management can help drive growth in operating income. Oracle’s $6.1 billion in operating costs are a sizable pool of expenses that management could further cut into. All things considered, will you add ORCL stock to your watchlist?
Top Software Stocks To Buy [Or Sell] Now: Microsoft Corporation
Microsoft (MSFT Stock Report) is a titan in the software industry and would not need an introduction. The company develops, manufactures, licenses, and sells all sorts of software and hardware. Billions of people all around the world use Microsoft’s software. Its Microsoft Office software is an essential tool to carry out office tasks and improve productivity. Microsoft Windows on the other hand is the most popular operating system in the world with over 1 billion devices running Windows 10 alone.
The company has just posted its first-quarter fiscal in October. Microsoft reported a revenue of $37.2 billion which was a 12% increase. Operating income increased by 25% year-over-year at $15.9 billion. These are impressive figures no doubt and the software giant is showing no signs of stopping. CEO Satya Nadella sums it up perfectly “The next decade of economic performance for every business will be defined by the speed of their digital transformation. We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”
This would certainly play well for the company’s long-term growth as more companies embrace the digital age. The company has also just announced a global collaboration with Johnson Controls (JCI Stock Report), a global leader in smart and sustainable buildings. By collaborating, the two companies will digitally transform how buildings and spaces are built and managed. This collaboration will no doubt increase Microsoft’s cloud segment business. For these reasons, will Microsoft be a top software stock to watch?