The U.S. stock market has entered correction territory, with the Nasdaq Composite and S&P 500 declining 11.4% and 7.5% respectively, year-to-date. Last week. the market witnessed its worst week since March 2020 due to concerns over looming interest hikes and the overvaluation of equities. The tech and software sectors have witnessed a sharp decline. However, according to Nuveen, the outlook for software is bright because demand remains robust.
Remote lifestyles and continuing digitization are helping to buoy global software industry demand. Therefore, certain high-growth tech stocks are currently trading near record highs, reflecting bullish investor outlook. According to a recent market study by Technavio, the Independent Software Vendors Market is expected to grow at a 13.3% CAGR from 2021 - 2026.
So, we think it could be wise to add quality software stocks SS&C Technologies Holdings, Inc. (SSNC) and Verint Systems Inc. (VRNT) to one’s portfolio now. They are currently trading near their 52-week highs.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC, in Windsor, Conn., together with its subsidiaries, provides software products and software-enabled services to financial services and healthcare industries. It operates through the following geographical segments: United States; Europe; Middle East and Africa; Asia Pacific and Japan; Canada; and the Americas.
On Dec. 9, 2021, SSNC agreed to acquire Hubwise Holdings Limited. Bill Stone, Chairman and CEO said, “Adding Hubwise is a natural step for our successful existing partnership. In addition, the combination of SS&C and Hubwise will create a unique solution for the adviser and distributor community to better address increasing competitive and regulatory pressures.”
SSNC’s adjusted revenue increased 9.5% year-over-year to $1.27 billion in its fiscal third quarter, ended Sept. 30, 2021. Its adjusted operating income came in at $524.1 million, up 16.8% year-over-year. And its adjusted EPS was $1.32, up 20% year-over-year.
Analysts expect SSNC’s revenue to increase 7.2% year-over-year to $5.02 billion in its fiscal year 2021. Its EPS is estimated to grow 7.9% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 15.2% in price to close yesterday's trading session at $77.18. It is currently trading 9% below its 52-week high of $84.85, which it hit on January 13, 2022.
SSNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SSNC has a B grade for Growth, Sentiment, Stability, and Quality. Within the Software - Business industry, it is ranked #2 of 61 stocks. Click here to see the additional POWR Ratings for Value and Momentum for SSNC.
Verint Systems Inc. (VRNT)
VRNT provides customer engagement solutions worldwide. It helps the world’s most iconic brands–which include more than85 of the Fortune 100 companies–build enduring customer relationships by connecting work, data, and experiences across the enterprise.
On December 2, 2021, Dan Bodner, VRNT CEO, said, “The momentum we experienced in the first half of the year continued in the third quarter with strong cloud revenue growth, strong new PLE bookings growth, and strong revenue and diluted EPS coming in significantly ahead of expectations.”
VRNT’s total revenue increased 4.5% year-over-year to $224.82 million for its fiscal third quarter, ended Oct. 31, 2021. The company’s non-GAAP net income was $52.47 million, up 3.3% year-over-year. Its EPS came in at $0.12, versus a $0.08 loss per share in the year-ago period.
For its fiscal year 2023, analysts expect VRNT’s revenue to increase 7.1% year-over-year to $937.78 million. Its EPS is estimated to increase 14% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 33.2% in price to close yesterday’s trading session at $55.33. It is currently trading 1.1% below its 52-week high of $54.74, which it hit on Jan. 20, 2022.
VRNT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. It has a B grade for Value and Sentiment. Within the Software - Business industry, it is ranked #11. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, and Quality for VRNT.
SSNC shares were trading at $77.95 per share on Wednesday morning, up $0.77 (+1.00%). Year-to-date, SSNC has declined -4.92%, versus a -7.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
2 Strong Software Stocks Trading Near 52-Week Highs Amidst the Market Sell-Off StockNews.com
