Software stocks have rallied sharply this year as investors bet on asset-light, high-growth companies that will see demand hold up through the current pandemic. However, valuations in the sector appear quite rich, even after the recent corrections. In our indicative theme of High Growth Software Stocks At A Fair Price we’ve picked a theme of software stocks that have seen good historical growth and yet are trading at relatively attractive valuations. The theme has returned about 19% year-to-date, versus 3.4% for the S&P 500. It remains up 65% Since 12/31/2017 vs. 25% for the S&P. Alarm.com Holdings (NASDAQ: ALRM) up 30% year-to-date has been the biggest driver of the theme’s returns. On the other side, RealPage’s (NASDAQ: RP) performance has been more muted, with the stock gaining about 4% this year. Below is a bit more about the companies in our theme.
Alarm.com Holdings provides cloud-based services for remote control, home automation, and monitoring services. The stock is up by about 30% year-to-date.
Workiva Inc. Class A offers cloud-based solutions for enterprises to collaboratively collect, manage, report, and analyze business data in real-time across areas such as finance, accounting, and compliance. The stock is up by about 26% this year.
Take-Two Interactive Software is a video game holding company. The stock has gained about 25% year-to-date.
Mimecast Limited develops cloud security and risk management services for email and corporate data. The stock is up by about 7.3% this year.
RealPage offers software as a service solution for property and real estate management The stock is up by about 3.6% this year.
What if instead you are looking for a more balanced portfolio? Here’s a top-quality portfolio to outperform the market, with over 100% return since 2016, versus 55% for the S&P 500, Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk. It has outperformed the broader market year after year, consistently.
See all Trefis Price Estimates and Download Trefis Data here
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams