5 Software Stocks Rated ‘Strong-Buy’ For June

The Ukraine-Russia war and the Fed’s impending interest rate increases have driven a massive tech sell-off. However, continuing remote working trends have heightened demand for software services in almost every industry. In addition…

the growing adoption of advanced technologies, such as blockchain and artificial intelligence, and increasing investments by businesses to make their operations efficient should also help the sector thrive.

Furthermore, the developing metaverse, rapid business automation, and rising demand for data analytics could bolster the demand for software services. According to Gartner, software spending is expected to grow 9.8% to $674.9 billion in 2022.

Given the industry’s promising prospects, we think it could be wise to bet on the stocks of fundamentally sound companies Amdocs Limited (DOX), Sapiens International Corporation N.V. (SPNS), Commvault Systems, Inc. (CVLT), Progress Software Corporation (PRGS), and American Software, Inc. (AMSWA). These stocks are also rated a “Strong Buy” in our POWR Ratings system.

Amdocs Limited (DOX)

Headquartered in Chesterfield, Mo., DOX and its subsidiaries provide software and services worldwide. The company designs, develops, operates, implements, supports, and markets open and modular cloud portfolios.

Last month, DOX agreed to acquire MYCOM OSI, a U.K.-headquartered company that provides SaaS-based cloud network and service assurance solutions to communications service providers globally. The acquisition will augment DOX’s network portfolio to include end-to-end service and network orchestration by bringing key assurance capabilities to power the next generation of networks. MYCOM OSI’s award-winning service assurance suite comprises performance management, fault management, and service quality management, leveraging artificial intelligence (AI) and machine learning (ML) to detect and predict anomalies and enable intent-driven closed-loop operations through automated remediation and AIOps.

Also, last month DOX was selected by VodafoneZiggo to deliver a wide-ranging transformation that unlocks new growth capabilities for the Dutch telecoms operator. Under this transformation, based on the DOX’s Commerce and Care suite, VodafoneZiggo’s fixed-line and mobile customers will experience a combined user journey across all lines of business. The project will emphasize self-service enablement and ensure shorter average handling times. Moreover, VodafoneZiggo will benefit from reduced time to market operationally and cost savings.

In the second quarter, ending March 31, 2022, DOX’s total revenue increased 9.2% year-over-year to $1.15 billion. Its non-GAAP operating income grew 9.1% from its year-ago value to $201.63 million, while its non-GAAP net income amounted to $190.94 million, up 28.9% from its year-ago value. The company’s non-GAAP EPS rose 36.3% from its prior-year quarter to $1.54.

The  $1.27 consensus EPS estimate for the third quarter, ending Sept. 30, 2022, represents 10.1% year-over-year growth. Analysts expect its revenue to increase 8.8% year-over-year to $1.16 billion for the third quarter, ending June 30, 2022. Furthermore, DOX has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.

The stock has gained 16.2% in price year-to-date and 23.7% over the past six months.

DOX’s POWR Ratings reflect this promising outlook. The company has an overall A rating. Which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

DOX is also rated B for Quality and Stability. Within the C-rated Software – Business industry, it is ranked #1 of 157 stocks.

To see additional POWR Ratings for Momentum, Value, Growth, and Sentiment for DOX, Click here.

Click here to check out our Software Industry Report for 2022

Sapiens International Corporation N.V. (SPNS)

SPNS in Holon, Israel, sells software solutions for the insurance and financial services industries internationally. The company offers Sapiens CoreSuite and Sapiens IDITSuite for personal, commercial, and specialty lines; and Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster for life, pension, and annuities.

Recently, SPNS announced a partnership with Mindtree, a global technology consulting and services company, to help assist digital transformation through the insurance industry. The combination of SPNS’ industry-leading, cloud-native, core suite of insurance applications and Mindtree’s deep insurance domain knowledge and extensive delivery capabilities should accelerate the scale, speed to market, and customer satisfaction as insurance companies embrace digital.

Also, in March, SPNS agreed with Albany Group, which has…

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