Top software stocks are having a great year in the stock market so far. Undeniably, the growth of the Internet of Things (IoT) is a primary driver of the industry’s success. According to the International Data Corporation (IDC), the research report estimated that the compound annual growth rate (CAGR) of IoT spending to be over 11% in the next four years. Notably, it cites software as the fastest growing technology category with a CAGR of 13.5% in the same time frame. The prominence of software in the world today is very apparent. In light of this, sharp-eyed investors are keeping a close watch on the best software stocks to buy.
To illustrate, most top corporates in the stock market today relied heavily on software this year. This is due to the forced shift to the digital front for virtually all businesses caused by the coronavirus pandemic. Without the proper software in place, none of this would be possible. All kinds of software stocks have been in the limelight throughout the year. This ranges from cybersecurity stocks to software as a service (SaaS) stocks. For example, CrowdStrike (CRWD Stock Report) and Zoom (ZM Stock Report) have seen their share prices skyrocket more than 300% year-to-date. What do they have in common? You guessed it, they both sell software.
However, the question remains as to whether or not top software stocks to watch will continue to perform after the pandemic ends. Well, a lot more people are experiencing the efficiency and ease-of-use brought about by software innovations. Could this be enough to usher in a new glorious era for the software industry? With all that said, here is a list of top software stocks for you to consider.
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First on this list is Slack (WORK Stock Report). The California-based international software company has been around since 2009. Slack is well-known as a company communication software provider. Its main business model relies on a cloud-based collaboration tool centered on workplace communication. Admittedly, the company is in the limelight this week with a massive 53% increase in the share price. Let us take a closer look at what it seems to be doing right.
In its second-quarter fiscal released in September, the company reported a 49% year-over-year increase in total revenue. Undoubtedly, this is thanks to the 8000 new customers gained in the quarter. Furthermore, the company also reported 87 paid customers with annual recurring revenue greater than $1 million. This marks an increase of 38 over the last year. In essence, all this added up to a 30% year-over-year increase in paid customer growth.
CEO Stewart Butterfield said, “One of the drivers of this acceleration was Slack Connect, which offers seamless, secure inter-company collaboration that we believe is light years ahead of email.” The company is slated to release its most recent quarter fiscal on December 9. It appears that some investors have already preemptively jumped onto the WORK stock train in anticipation of positive results.
Reports earlier this week indicate that Customer Relationship Management (CRM) software provider Salesforce (CRM Stock Report) is acquiring Slack. Consequently, this could prove to benefit both companies in the long run. For one thing, the acquisition could see Salesforce leveraging on Slack’s expanding customer base. Comparatively, this could be the beginning of a rival to Microsoft’s (MSFT Stock Report) Microsoft Teams platform. Regardless, Slack appears to be doing well. All things considered, should you be watching WORK stock closely?Top Software Stocks To Watch Next Week: ServiceNow Inc
Next up is ServiceNow (NOW Stock Report). ServiceNow is a California-based software company. Its key cloud computing platform is called the Now Platform. The Now Platform functions to help companies manage digital workflows for enterprise operations. It does so by providing companies with a means to digitize and automate departmental and cross-enterprise workflows. Essentially, this allows ServiceNow customers to optimize their business processes on a single cloud-based platform. Furthermore, its customers consist of almost 80% of the Fortune 500.
ServiceNow is having an amazing year so far. Its share price is seeing a year-to-date increase of 78%. This is reinforced further by the company’s third-quarter fiscal released in October. In it, ServiceNow reported a 31% rise in subscription revenue year-over-year. Unsurprisingly, this is due to the 41 transactions worth over $1 million in net new annual contract value secured by the company in the quarter. It also recorded over a thousand customers with similar annual contract values.
Last week, the company announced that it would be collaborating with ASGN Incorporated (ASGN Stock Report). This deal involves subsidiaries of both companies. Namely, ECS from ASGN and Integrated Solutions Management (ISM) from ServiceNow. ECS helps large enterprise organizations in pursuit of IT modernization and digital transformation strategies. In brief, ECS designs, deploys, and manages major digital transformation strategies for government agencies, global hospitality companies, and other large enterprises with distributed operations. This collaboration would likely benefit both parties. Together, the two would be able to leverage ServiceNow’s platform and IoT capabilities by extending the services to the government and commercial sectors. In turn, this would present a massive opportunity for ServiceNow to expand its current customer base. With all this said, should investors be looking at NOW stocks during these exciting times for the company?Top Software Stocks To Watch Next Week: 21Vianet Group
Last but not least, another top software stock to watch is 21Vianet (VNET Stock Report). In China, it is the largest carrier-neutral Internet and data center service provider. Furthermore, the company is the exclusive operator of Microsoft Azure and Office 365 services in China. Recently, 21Vianet has been gaining attention from investors. Clearly, this is because the company’s share price is up by 30% in the last week. What else could have caused this?
Notably, 21Vianet also released its third-quarter fiscal earlier this week. It reported a third-quarter revenue rise of 27% year-over-year. It also reports an adjusted gross profit increase of 32% in the same time. This would explain the company’s great performance over the last quarter.
CEO Alvin Wang said, “We are pleased to announce that we delivered a strong performance in the third quarter of 2020 as a result of our dual-core growth strategy, competitive IDC solutions for both retail and wholesale customers, and on-schedule development schedule.” Additionally, the company provided its full-year guidance for the fiscal year at a 26% rise in revenue from the previous year. 21Vianet appears to be confident about its momentum moving forward.
In recent news, the company was awarded the Science and Technology Achievement Award at the Data Center Standards Summit held in Beijing. This award was presented to the company in recognition of its outstanding contributions to advanced science and technology in the data industry. Coupled with its stellar performance in the last quarter the company does not appear to be slowing down. Given these points, should you add VNET stock to your watchlist?