Software industry is benefiting from a steadily strong digital transformation environment. The last few years have witnessed a series of breakthroughs in cloud computing, predictive analysis, artificial intelligence (AI), digital personal assistants and Internet-of-Things (IoT), which set the stage for solid growth in the software industry.
Moreover, a continued enterprise investment in Big Data and analytics along with the ongoing adoption of Software-as-a-Service (SaaS) presents a significant growth opportunity. Notably, the cloud offers a flexible and cost-effective platform to develop and test new applications and the deployment time is also much shorter compared with legacy systems. SaaS companies are expected to register a top-line improvement owing to a higher percentage of recurring revenues, subscription gross margin and a lower churn rate.
The growth prospects are also bright given an increased spending by enterprises on software procurement. Per Gartner, global IT expenditure is projected to grow 3.2% in 2019 to $3.8 trillion, driven by enterprise software, cloud and digital transformation efforts. Enterprise software spending, which is likely to record highest growth of 8.3% in 2019, is being driven by SaaS, adds Gartner.
Furthermore, an increasing focus on providing a better customer experience is boosting growth of customer relationship management (CRM) software. Cloud software is likely to witness more than 22% growth this year compared with the 6% rise for all other Software forms, adds Gartner.
Additionally, the growing need to secure cloud platforms amid rampant incidents of cyber-attacks and hacking drives demand for cyber security software. Further, enterprises are aiming at rapid migration to cloud and DevOps technologies for achieving scalability and agility in favour of software development and IT operations, which ultimately help delivering a flawless digital experience to clients.
4 Top-Performing Picks
Here we have highlighted four software stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. Our research shows that stocks with an impressive VGM Score of A or B when combined with a top Zacks Rank offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Melville, NY-based Verint Systems (VRNT - Free Report) is a leading provider of analytic solutions for communications interception, digital video security and surveillance plus enterprise business intelligence. The stock has a Zacks Rank of 1 and a VGM Score of B. The company delivered average four-quarter positive surprise of 12.8%. The Zacks Consensus Estimate for fiscal 2019 earnings of $3.17 has inched 1% up in the past 60 days.
Headquartered in Mountain View, CA, Symantec (SYMC - Free Report) is a provider of a broad range of solutions for content security and information back up to individuals and enterprises. The stock is a Zacks #1 Ranked player and has a VGM Score of B. The company pulled off average four-quarter earnings surprise of 14.2%. The Zacks Consensus Estimate for fiscal 2019 earnings of $1.54 has moved 1.3% north in the past 60 days.
Austin, TX-based, Digital Turbine (APPS - Free Report) offers products and solutions for mobile operators, device OEMs and third parties. The stock has a Zacks Rank #2 and a VGM Score of B. The company came up with average four-quarter beat of 25%. The Zacks Consensus Estimate for fiscal 2019 earnings of 4 cents has skyrocketed 300% in the past 60 days.
Domiciled in Midrand, South Africa, MiX Telematics (MIXT - Free Report) is a provider of fleet and mobile asset management solutions. The stock has a Zacks Rank of 2 and a VGM Score of A. The company delivered average four-quarter positive surprise of 31.99%. The Zacks Consensus Estimate of 63 cents for fiscal 2019 earnings has remained unaltered in the past 60 days.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
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