Are These High Growth Software Stocks On Your Watchlist?
The widespread digital transformation led to the rise of software stocks. As people are working remotely and maintaining stringent social distancing measures, cloud businesses have been gaining popularity. The high-growth software stocks are gaining ground on Monday, despite the overall stock market pulling back during the first half of the trading session.
Uncertainty continues to center around the impact of the novel coronavirus on the economy. At the same time, there seems to be a growing interest among investors in high-quality and fast growing software stocks. Capturing the bullishness of software stocks and the potential they have in the long term could turn out to be a rewarding bet. With that being said, should investors build their positions in top software stocks?
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Why Should We Focus On Software Stocks In The Near-Term?
When we think about frontliners, the first thing came to mind would be health care professionals. Software companies are also frontliners against the pandemic too. Imagine what would happen if we do not have online classes, video conferencing, or online shopping? Without some of these infrastructures in place, don’t even think about remote project collaborations. Without these software companies, the global economy will really see a complete halt in activities.
With the increasing demand for cloud-based solutions, private enterprises and healthcare organisations are turning to software companies for solutions. The cloud space has massive growth opportunities as digital enterprise management has become a necessity to compete in any industry. That said, are these software stocks or cloud-focused technology stocks on your watchlist?
Top Software Stocks To Buy Or Sell This Week: Fastly
First, on the list, Fastly (FSLY Stock Report) is a $4.5 billion provider of infrastructure software and services including cloud computing, image optimization, security, edge computer technology, and streaming solutions. The stock has gained 150% since May 2020. So what is it that got investors so excited about FSLY stock?
The answer? TikTok. As a Content Delivery Network (CDN) provider, Fastly serves the fast growing social media platform. So if TikTok is such a hit, why are we not investing in TikTok stock? Cough..cough.. That’s because the parent company of Tiktok is ByteDance, which has yet to go public. There are a few reasons why the company isn’t going public yet. The first to come to mind is the tensions between the US and China.
Can Fastly Continue To Grow Even After The Pandemic?
Fastly’s first-quarter revenue grew 38% year over year to $63 million. While this is definitely a good news for the company, the management’s guidance for second-quarter revenue to jump about 57% year over year was even better. This is particularly notable as most companies are withdrawing their guidance for the following quarters this year. And some refrained from reiterating their supposedly strong guidance.
Fastly’s management is increasingly optimistic given its strong business momentum this year. This came after the continued customer expansion in its platform and increased internet traffic as consumers and workers shelter at home. No doubt the pandemic has given the company a lift. The trend may continue into Q2 and possibly the second half of 2020. With all that in mind, should investors act fast to buy Fastly stock now?
Top Software Stocks To Buy Or Sell This Week: Salesforce
Salesforce (CRM Stock Report) is the global leader in the customer relationship management industry. It brings companies and customers together through the Customer 360 platform. According to research firm IDC, Salesforce dominated the CRM market with a market share of 18.4% during 2019. That’s way ahead of its major rivals, SAP (SAP Stock Report) and Oracle (ORCL Stock Report), with 5.3% and 5.2% respectively.
The success is largely due to Salesforce’s comprehensive cloud-based portfolio. It allows cross-selling opportunities between its different solutions for enterprises to manage their sales, marketing campaigns, human resources and more. That’s mainly due to key acquisitions made over the years that could complement its products and technologies. The acquisition strategy seems to be working well, especially with the SaaS industry heads towards maturity. While mergers and acquisitions don’t always result in the intended synergies in many companies, Salesforce is clearly one of the few exceptions. So how does Salesforce stay head of the race all the time?
The strength of Salesforce lies with its ability to retain its clients with a low monthly churn rate of 8%. Shares of CRM stock have gone up more than 40% since the market crash in March. The CRM stock is now up 7% year to date. It has achieved quite an impressive feat to overcome the plunge from the coronavirus-induced market crash earlier this year. Now that CRM stock is back to pre-pandemic levels, can we expect CRM stock to continue its rally?