Are These Software Stocks On Your List Of Best Stocks To Buy Now?
Software stocks have been fantastic buys for investors seeking out growth this year. Let’s face it, cloud computing has been one of the best performers in the stock market this year. But it is easy to overlook the fact that success doesn’t come overnight. These companies have been laying their groundwork for years, allowing investors to reap the benefits today. While the COVID-19 pandemic has been a disaster for the stock market today, some cloud computing stocks are taking off very quickly. This came as the pandemic accelerated changes in the technology industry. Social distancing measures are benefiting companies who provide various technological solutions to businesses. The momentum could continue as higher adoption led users to stick to these solutions over time. You can think of it as a “new normal” for tech.
Cloud computing is a high-growth industry that’s being bid up to the… clouds. There’s no denying that valuations are high. Some say these top software stocks are priced to perfection. Some corrections every now and then are certainly possible. But technology is sticky. Many companies are not going to uproot their software abruptly. The benefits from cloud apps will continue to manifest even after offices reopen. Thus, many of the best software stocks to watch will continue to benefit. Let’s put it this way. You can think of it as the growth being pulled forward, but there is still plenty of growth ahead.
Now, the Nasdaq Composite is trading around its all-time high. The tech-heavy index is up nearly 80% since the stock market crash caused by the coronavirus pandemic earlier this year. You have software stocks to thank for this exceptional performance. Top software stocks like DocuSign (DOCU Stock Report) and Okta (OKTA Stock Report) are examples of software stocks posting strong gains this week. With that in mind, here is a list of top software stocks to watch in December 2020.
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Top Software Stocks To Watch Now: Snowflake
Snowflake (SNOW Stock Report) is a software stock which has seen massive growth since its initial public offering in September. Snowflake is a software company that provides cloud-based data as a platform. Its platform lets customers consolidate data into a single source of truth to drive meaningful business insights. It also helps build data-driven applications and share data. It is used by a lot of organizations in many different industries. So let’s look at what has been going on recently with Snowflake, and why this company is trending this week.
Snowflake share prices went up by a staggering 28% in the past month alone. The software maker issued its first quarterly report as a public company on Wednesday. The company’s revenue grew 119% year over year in its fiscal third quarter, which ended on October 31. Previously, the company reported a 174% rise in revenue from its fiscal-year-ended (FYE) 2019 to FYE 2020. Even Warren Buffett’s Berkshire Hathaway (BRK.A Stock Report) invested in SNOW stock before its initial public offering. Considering all this, eagle-eyed investors definitely have Snowflake in their scopes.
To top it all off, the company said it now has 65 customers contributing over $1 million in product revenue over the last 12 months. In addition to that, Snowflake said that it can widen its gross margins to the mid 70% range. This is by getting more favorable pricing from cloud providers such as Amazon (AMZN Stock Report) and Microsoft (MSFT Stock Report). It may also cut back on discounts, according to Mike Scarpelli, Snowflake’s finance chief. With all that in mind, is SNOW stock one of the top software stocks in the stock market today?
Top Software Stocks To Watch Now: Anaplan
Enterprise planning specialist Anaplan (PLAN Stock Report) is turning heads again after a rough start to 2020. In the past month alone, Anaplan’s shares have soared nearly 20%. This could be because of the company’s stellar performance in its most recent quarter. In addition, it also provided a strong outlook for the fourth quarter. Revenue came in 28% higher this quarter to $114.9 million, topping the consensus estimate of $109.7 million.
“We delivered a strong quarter as companies prioritize investments toward initiatives that drive incremental business value,” CEO Frank Calderoni said in a statement. “By using our Connected Planning platform, our customers stay ahead of their competition with the ability to adjust and adapt quickly to an everchanging environment.”
In spite of current challenges, Anaplan is making progress and setting itself up for years of growth in the post-pandemic world. The company could have a lot going for it in the year to come, especially as effects of the pandemic appears to be waning off. And considering that safe and effective vaccines are on the brink of roll-out, Anaplan’s actual results could be even better than projected. With $297 million in cash on its balance sheet, Anaplan has ample resources to continue growing. Considering that, would you be watching PLAN stock this month?
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Top Software Stocks To Watch Now: Unity Software
Unity Software (U Stock Report) is also another top software stock to watch in the stock market today. The company’s stock price climbed to an all-time high level of $155.95 during intraday trading on December 1, before a slight correction recently. Unity is arguably one of the best software stocks you can find on Wall Street right now. The company had its IPO in September of this year. The company is the world’s leading platform for creating and operating interactive, real-time 3D content. In 2019, more than 50% of the top 1000 games in Apple’s App Store and Google’s Play Store were built using Unity’s software platform. Unity currently supports more than 90% of the top video game companies worldwide.
In November, Unity announced its third-quarter results. The company reported revenues of $200.8 million, representing a 53.3% increase year-over-year. Unity also reported a dollar-based net expansion rate of 144% in the third quarter. In the company’s guidance for Q4, they estimate that its revenue numbers will be between $200M to $204M. Meanwhile, the 2020 fiscal year outlook for revenues is between $752 million to $756 million.
Even though Unity is still relatively new to the public market space, it’s not new to the gaming industry. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts (EA Stock Report) and Tencent (TCEHY Stock Report). The question is, do you believe the gaming industry will continue to grow shareholders’ wealth? If you like gaming and investing, would you consider U stock the best software stock to buy right now?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
