If you are primarily a growth investor, chances are you haven’t had the best year in the markets so far. Many high-growth names that were huge winners in 2021 have faced serious selling pressure amid concerns about valuation and inflation. That said, we are now seeing some of these names bounce back and move closer to new highs. True leaders in the software space are being established with each passing day, and investors may benefit from taking note.
Rapidly growing software stocks can be difficult to value because most of the time they are unprofitable and are valued based on their future prospects. That said, several software names producing breakthrough technology are clearly favorites with institutional and retail investors right now. These stocks are making a big comeback after a period of correction or consolidation and are certainly worth watching in the future. Let’s take a look at 3 software growth stocks that are making a comeback below.
Cloudflare Inc (NYSE: NET)
If you are a fan of legendary trader Jesse Livermore and his strategies, you may be familiar with his “Century Mark Rule”. This rule states that “when a stock crosses $ 100 or $ 200 or $ 300 for the first time, the price doesn’t stop there but goes up much higher, so that if you buy it as soon as it crosses line, it’s almost certain to show you a payoff. ”That’s a big reason Cloudflare should be on your radar, as the stock broke the crucial $ 100 per share mark earlier this week. is a web infrastructure and web security company that is clearly in favor right now.
Cloudflare’s platform helps businesses increase the security of their websites and services, which is huge in today’s increasingly connected world. The company powers Internet requests for about 17% of the Fortune 1,000 and has grown steadily in its user base in recent years. Most recently, the company reported first quarter revenue of $ 138.1 million, up 51% year-over-year, and record net dollar retention of 123%. The future looks bright for this software stock, and the stock is showing noticeable strength in a mixed band.
Atlassian Corporation (NASDAQ: TEAM)
Atlassian Corporation, a company that offers a range of team collaboration products, is another software growth stock that is coming back in force after a period of weakness. The company is a leader in “meta-software,” which is software that helps create additional software that can improve areas of a business. The digital transformation trend is certainly benefiting Atlassian, and the fact that its products help teams work more efficiently means its software is marketable for virtually any business.
Atlassian is disrupting existing markets, especially legacy software vendors, and is poised for strong growth for years to come. The company reported strong third-quarter earnings in April, which included quarterly revenue of $ 569 million, up 38% year-over-year, and net income of $ 150.7 million. It’s also worth noting that Atlassian saves a ton of money on marketing by using a web-based sales model, which in turn leads to better margins. The stock is reaching new all-time highs and is certainly worth a visit for tech-savvy investors interested in one of the fastest growing stocks in software.
Shopify (NYSE: SHOP)
I wrote about Shopify in April after the company reported outstanding first quarter results including revenue of $ 988.6 million, up 110% year-on-year, and gross volume of goods of $ 37.3 billion, up 114% year-on-year. The stock curiously fell sharply following the initial reaction to earnings, but rallied strongly over the past week. It seems like it’s only a matter of time before this innovative ecommerce software company hits all-time highs, and it’s definitely worth a look if you’re interested in software growth stocks. .
Shopify is so compelling that it is a company that is revolutionizing the ecommerce ecosystem. The company’s platform enables entrepreneurs and businesses to build beautiful and organized online stores without any prior web design experience. The company makes e-commerce easy and affordable and enables entrepreneurship, which any investor can support. As the stock has climbed over 17% over the past week, investors may consider adding stocks in the next pullback or period of consolidation as new highs are a stone’s throw away. .
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