Should Investors Be Watching These Top Software Stocks This Week? 3 Names To Know
It has been a fantastic year for software stocks in the stock market so far. Understandably, this is because of the surging demand for software services in 2020 that was caused by the coronavirus pandemic. Companies and businesses were forced to prioritize digital acceleration and software is what facilitates this process. Accordingly, investors appear to be well aware of this. Software companies that have stepped up in these times have become some of the top software stocks in the stock market today. Prime examples of this would be companies such as DocuSign (DOCU Stock Report) and Twilio (TWLO Stock Report). These two companies provide e-signature and cloud communication services respectively. Admittedly, both of these are essential aspects of running an online business.
It should also be noted that our two examples earlier are in the Software-as-a-Service (SaaS) space. These kinds of companies provide ongoing support for clients looking to bolster their digital workspaces. As a result, the SaaS market has grown significantly this year thanks to acceleration from coronavirus tailwinds. In fact, Valuates Reports predicts that the global SaaS market will be worth $307 billion by 2026. Based on these impressive figures, I’m not surprised to see investors flocking to the software industry.
Nevertheless, some of the best software stocks to buy now face the same question as most top growth stocks this year. That is, can they keep this momentum up in a post-pandemic world? Well, your guess is as good as mine. Time will tell if the efficiency and ease of use brought about by the SaaS industry sticks for good. With that in mind, here are the top software stocks to watch right now.
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Best Software Stocks To Watch Right Now: Salesforce.com, Inc.
Starting us off, we have software giant Salesforce (CRM Stock Report). Salesforce is the largest SaaS company in the U.S. with a market capitalization of over $206 billion. For some context, it is a California-based cloud software company that specializes in customer management services. Customer feedback informs businesses of issues in any new online services they may be offering. Understandably, this makes it a vital aspect of running an online business right now. This is reflected in CRM stock which is up by over 80% since the March lows.
Correspondingly, its third-quarter fiscal paints a clearer picture of its impressive growth. In it, the company reported total revenue of $5.42 billion for the quarter. On top of that, it also ended the quarter with $3.72 billion in cash on hand. CEO Marc Benioff said, “We had another record quarter, and now we’re raising our FY21 revenue guidance to $21.11 billion at the high end and initiating FY22 guidance of $25.5 billion. No other major enterprise software company is growing at this rate.” Salesforce appears to be confident about its ability to deliver strong results moving forward. As a result, I would expect investors to be wondering what the company plans to do to achieve its growth goals.
Just last week, India’s Yes Bank announced a team-up with Salesforce. Yes Bank is the first private bank in India to collaborate with the company. The deal involves the creation of a technology platform that will bolster the bank’s retail lending business. In turn, the bank would be able to provide personalized solutions and connected banking experiences for consumers across its retail segments. More importantly, customers will be exposed to the Salesforce platform. With solid financial prospects and ever-growing international influence, do you think CRM stock will continue to rise in 2021?
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Best Software Stocks To Watch Right Now: Datadog Inc.
Following that, we have Datadog (DDOG Stock Report). Notably, the company’s share prices are up by over 180% year-to-date. The key to this explosive growth could lie in its key offerings. In summary, Datadog offers cloud-monitoring services. It does so via its proprietary SaaS-based data analytics platform. Logically, it would be in the limelight this year as many large companies rely on the cloud to store data. Conveniently, Datadog would provide much-needed oversight throughout the process of digital acceleration.
The company recently revealed that leading U.S. smart parking solutions provider ParkMobile has been using its services. To elaborate, the company has been using Datadog for monitoring and logging its migration from an on-premises environment to a cloud-based environment on Amazon Web Services. ParkMobile CTO Matt Ball hailed Datadog saying, “Datadog is intuitive and cost-effective, and it has allowed us to index all our logs, see them alongside our metrics, and trace our applications with support for the languages we use. We adopted Datadog in February 2020 and we were fully out of the data center by June. Datadog really accelerated our migration.” This is a spectacular play by the company as it is able to flex its prowess. In the long-run, this could benefit the company as larger clients seek to fortify their cloud infrastructure.
Datadog’s capabilities are also reflected in its third-quarter fiscal posted in November. In it, the company reported a 61% year-over-year surge in total revenue. Datadog also announced strategic partnerships with Microsoft (MSFT Stock Report) and Google (GOOGL Stock Report) in the same quarter. The company seems to be firing on all cylinders going into 2021. Given all of this, will you be adding DDOG stock to your January watchlist?
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Best Software Stocks To Watch Right Now: Zendesk Inc
Last but not least, we turn to Zendesk (ZEN Stock Report). It is a customer service software company that is based in California. The company builds software that serves to improve customer relationships. It does so by providing a simple customer support platform for small to medium-sized businesses (SMB). The company uses software that is powerful and scalable to meet the needs of its 160,000 customers worldwide. To highlight, ZEN shares are up by over 150% since the March lows.
In the company’s third-quarter fiscal posted in October, Zendesk reported that its revenue grew by an impressive 24% year-over-year at $262 million. The company also claims that its churn rates had returned to pre-pandemic levels and its SMB revenue has stabilized. Evidently, there is a strong demand for Zendesk’s solutions and good growth in the number of new paid customer accounts. Zendesk also reports a net income of $21 million, which is a 50% increase compared to a year earlier. In the company’s financial guidance, it expects to hit the $1 billion mark for its full-year 2020 revenue.
Recently, it was announced that Zendesk is the first customer relationship management platform to join Unity’s (U Stock Report) Verified Solutions Partner (VSP). By being a VSP, Zendesk will be able to provide integrated customer support functions that can be set up in minutes. It allows players to get immediate help without having to leave the game. This is a great play by the company as the gaming industry is booming due to pandemic tailwinds. It seems that Zendesk is diving in to get a share of this growing market. Will it be enough to see ZEN stock hit new highs in 2021? I’ll let you decide.