Software firms have become the front face of the tech world. Software stocks hold a massive potential in the long-term.
Over the past few years, software stocks have been one of the hottest performers in the market. The design of the software has changed drastically over the past decade. The modern cloud-based software comes without carrying a load of legacy code and systems. They are much easy to understand and work with.
The software companies have a remarkable growth rate with firms gaining up to 40% to 50%. While most of the businesses have suffered heavily during the last 12 months. The economic circumstances can’t be assured in the middle of a global pandemic. But the stocks that have done great in these tuff times hold high potential in normal times.
So, some formidable software stocks hold great potential going forward. Here are the three best software stocks for long-term investment.
Microsoft Corp. (MSFT)
Microsoft Corp. (MSFT) is among the top five global firms with a market cap over $1 trillion, currently worth $1.60 trillion. The company has a wide portfolio in the digital world and servers millions of customers worldwide.
According to Bank of America’s analyst, Kash Rangan MSFT has the potential to continue double-digit revenue growth for at last another 5 years. According to Forbes, Microsoft’s revenue is expected to grow by 11% to $159.1 billion in the fiscal year 2021. While the net income is forecasted to rise to $51 billion, which will increase its EPS to $6.71 in FY 2021.
The company is well-positioned to capitalize on its major tech growth trends in employee and customer engagement, connectivity, and business analytics. All this growth is backed by projects like Azure and gaming, and other external partnerships including GitHub and LinkedIn.
DocuSign (DOCU) is a U.S.-based firm that allows firms to manage electronic agreements. Through its agreement Cloud, the company offers eSignature service.
DocuSign’s main e-signature product is doing well, but the company saw a real boost from its document agreement cloud service with increased bookings. The revenue soared up to 41% in the last quarter, with a whopping net expansion rate of 113%.
Importantly, DocuSign increased its larger companies’ customer base by almost 31% year over year. Whereas, the higher value agreements that were above $300K grew by 50%. Since the company is running with high bookings that are helping in driving more revenue, the potential looks great. If DocuSign continues with such momentum, good time waits ahead for DOCU investors.
Salesforce.com (CRM) is the market leader in CRM software. Salesforce stock made a notable growth in 2020, up by 33%. The CRM software firm has been doing great over the years, as the stock keeps on rolling steadily. The company continues to record significant growth.
In the CRM software world, the company has consistently reported the highest revenue for the last 7 years. Salesforce’s subscription revenue is growing at a notable pace. For the first nine months of FY 2021, the subscription revenue was up by 23.6% to $14.5 billion.
The company expects to grow its revenue by 21% in FY 2022, with continuing bullish momentum. Ragan believes that the company can organically double its revenue in the next four years’ time. While Salesforce sees its revenue at $26 billion in FY 2023. The CRM software company looks formidable going forward. It’s one of the top software stocks for a long-term investment with high potential.