Are These The Best Software Stocks To Buy in 2020?
Today, software stocks are flourishing in the stock market. With the COVID-19 pandemic ravaging the world in the last 10 months, more people are staying and working from home. As lockdown orders are in place and with people generally avoid going out, software companies stand to benefit. This has fueled the adoption rate of software and digital services that come from these software companies. The sky’s the limit when you see what software can offer. From aiding our daily lives to increasing our productivity, you can start to see why software companies have intertwined so deeply with us.
We use various software in almost all aspects of our lives as in this digital age. For instance, there are 3 billion smartphone users all over the world. It is the phone’s software that interfaces with us. The most dominant smartphone operating systems are Android by Alphabet’s (GOOGL Stock Report) Google and iOS by Apple (AAPL Stock Report). They allow us to browse the internet, take notes, or use the plethora of applications available. Besides, software powers our computers, allowing us to satisfy our working or leisure needs. The list of things that have software in them could go on, but you get the picture.
The S&P 500 Information Technology has been up by 66% in value since the March lows. Leading the recovery, the majority of these companies in this sector are software companies. When you piece the information together, you can see why top software stocks have been enjoying such unprecedented gains. With that in mind, here are 3 top software stocks to watch in the stock market today.
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Best Software Stocks To Buy [Or Sell] This Week: Adobe Inc.
Software company Adobe (ADBE Stock Report) has been enjoying 2020 so far. It is evident in its share price as the company has had a staggering 46% increase year-to-date. Adobe has shown resilience in overcoming the odds in a stock market that was badly hit by the pandemic. The software company is the brains behind one of the best creativity and document management software in the world.
Among its software is Photoshop which helps edit images and its Premiere Pro software which is able to carry out professional video editing. The company has enjoyed tremendous success in recent years after transitioning from a licensed software business to a Software-as-a-Service (SaaS) business. By having a SaaS model, it is basically a subscription-based service to ensure that users pay a monthly subscription to utilize the company’s software.
In the company’s third-quarter fiscal posted in September 2020, Adobe had reported a 14% growth year-over-year in revenue at $3.23 billion. The company also reported earnings per share of $1.97 and has increased by 22% year-over-year. The company’s CEO, Shantanu Narayen has stated that Adobe had delivered the best third quarter in its history. With more people working from home, it makes sense that there would be an increase in usage for Adobe’s software. From small businesses to large corporations, many are incorporating Adobe’s digital services and software into their operations. With that in mind, would you consider adding ADBE stocks to your watchlist?
Best Software Stocks To Buy [Or Sell] This Week: Microsoft Corporation
Microsoft (MSFT Stock Report) has also adopted a SaaS model in the last few years for its Office software. The company’s flagship software, Office, is an essential tool to simplify basic office tasks and improve productivity. Aside from its productivity and business process software, Microsoft is also an industry player in cloud computing and personal computing space. To date, the company has enjoyed a 34% increase in share price, sitting at $216.23 per share.
The company in its latest fiscal reported a revenue increase of 14% year-over-year to $17.2 billion across each of its 3 segments. Its productivity and business process revenue increased by 19% to $11.8 billion, driven mainly by Office and LinkedIn. Personal computing revenue was in turn driven by Windows and Surface and enjoyed a 14% increase to $12.9 billion.
Microsoft’s biggest winner was from its gaming division, Xbox. With more people staying at home, the company’s Xbox content and services had seen an increase in revenue of 65% from a year earlier. Gaming has become the country’s favorite hobby as most other outdoor activities were put on hold. In September, Microsoft acquired ZeniMax Media, the parent company of major gaming publisher Bethesda, demonstrating its gaming ambitions. With its next-generation Xbox scheduled for release in November 2020, Microsoft has positioned its gaming division for further gains. By taking all into consideration, is MSFT stock a good buy for the long run?
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Best Software Stocks To Buy [Or Sell] This Week: Autodesk
Another software stock that has been hot in the stock market is Autodesk (ADSK Stock Report). Autodesk makes software for people who make things. If you have ever driven a high-performance car, admired a skyscraper, or used a smartphone, chances are you have used a product that was designed by Autodesk. The software company has had a 35% increase in share price year-to-date.
Through its second-quarter fiscal posted in August 2020, the company has reported a 15% increase in revenue, to $913 million. This has beaten analyst estimates as Autodesk is gaining both profit and revenue while making a transition to the SaaS model as well. Fusion 360 is the company’s subscription-based software. This software combines industrial and mechanical design and simulation into an integrated concept-to-production toolset. This is its one-stop approach to the industry.
The company has also seen an increase in revenue in all 3 geographical centers, APAC, Americas, and EMEA. This shows the widespread adoption of its software all over the world as more users realize the potential of the company’s software. The company has recently acquired Pype, which uses machine-learning algorithms to elevate project management processes. This further strengthens Autodesk’s fundamentals in project design and management. With a steadily increasing customer base, the company expects revenue of $930-$945 million in its third-quarter fiscal. Would you include ADSK stocks to diversify your portfolio?