Reddit traders were at it again Tuesday, driving up the shares of SCWorx Corp. (WORX). The company is a provider of data content and services related to the repair, normalization, and interoperability of information for healthcare providers and big data analytics for the healthcare industry. Its software enables healthcare providers to simplify and organize their data.
The stock shot up 50% at the opening bell and ended the day up 19.5%. There wasn't any major news regarding the company, which means it was a classic short squeeze. The company has a short volume ratio of 36% and a low price, making it easy for investors to buy up shares to try to push out hedge funds trying to short it. The stock is highly volatile, evidenced by its 15% fall today, and is currently rated a Sell in our POWR Ratings system.
While WORX may not be the best software stock for investors right now, there are quite a few highly ranked in our POWR Ratings system. Salesforce.com Inc. (CRM), Workday, Inc. (WDAY), and Cadence Design Systems, Inc. (CDNS) are all ranked Buy and have numerous growth catalysts that should help push their prices higher in the months ahead.
Salesforce.com Inc. (CRM)
CRM provides enterprise cloud computing solutions, including Sales Cloud, the company's main customer relationship management software-as-a-service product. The company also offers Service Cloud for customer support, Marketing Cloud for digital marketing campaigns, Commerce Cloud as an e-commerce engine, and the Salesforce Platform, allowing enterprises to build applications.
The company is benefiting from an increasing demand environment as the rapid adoption of its cloud-based solutions is driving demand for its products. CRM's focus on introducing more products based on customer needs is helping to drive revenue growth. For instance, the addition of solutions in customer service, marketing automation, e-commerce, analytics, and artificial intelligence are helping boost its top line.
The company is also gaining on growth in the international market. While CRM currently dominates the sales force automation space, it still only controls 30% of this market, which suggests the company has more market share to gain. CRM has an overall grade of B, which translates into a Buy rating in our POWR Ratings system.
The company has a Sentiment Grade of B, which means that it is well-liked by the "Smart Crowd." Thirty-four analysts rate the stock a Buy or Strong Buy. CRM also has a Quality Grade of B due to its solid financials. The company had $15 billion in cash as of the most recent quarter compared with no short-term debt. The firm also has a net profit margin of 19.9%.
We also provide Growth, Value, Momentum, and Stability grades of CRM, which you can find here. CRM is ranked #25 in the Software-Application industry. You can find other top stocks in this industry by clicking here.
Click here to check out our Software Industry Report for 2021
Workday, Inc. (WDAY)
WDAY provides enterprise-level software solutions for financial management and human resource domains. The company's cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support. The firm also offers open, standards-based web-services application programming interfaces.
The company is expected to benefit from the increased adoption of subscription-based software solutions. WDAY's revenue growth is being driven by high demand for its Human Capital Management (HCM) and financial management solutions. Plus, extended capabilities and tools in HCM and FINS Plus solutions should help boost its user base.
The increasing number of add-on services in WDAY's offerings, including its core HCM software and its emerging financial business, should allow the company to exert further pricing power, helping to drive more revenue growth. WDAY has an overall grade of B, translating into a Buy rating in our POWR Ratings system.
The company has a Growth Grade of A, which isn't surprising as revenue has grown an average of 28.9% per year over the past five years. Sales are expected to grow 18.1% over the next year. WDAY also has a Sentiment Grade of B due to being a favorite among analysts. Twenty-three analysts have a Buy or Strong Buy rating on the stock.
For the rest of WDAY's grades (Value, Momentum, Stability, and Quality), click here. WDAY is ranked #26 in the Software-Application industry.
Cadence Design Systems, Inc. (CDNS)
CDNS was founded in 1988 after the merger of ECAD and SDA Systems. The company is an electronic design automation firm specializing in developing software, hardware, and intellectual property that automates the design and verification of integrated circuits or larger chip systems.
The company is poised to gain from strong adoption of digital & signoff solutions and its functional verification suite. CNDS also benefits from increasing investments in emerging trends such as the Internet of Things (IoT), autonomous vehicle subsystems, and strength in the semiconductor end-market. The company's frequent product launches should help sustain growth over the long term.
In fact, its expanding product portfolio and frequent product launches serve as a critical catalyst for the firm's growth potential. Plus, secular tailwinds in chip design, including 5G, IoT, and AI/machine learning, are expected to increase EDA tools' demand and support growth for the company. CDNS has an overall grade of B and a Buy rating in our POWR Ratings system.
The company has a Sentiment Grade of B as the company is highly rated by Wall Street analysts. Ten analysts currently have a Buy or Strong Buy rating on the stock. CDNS also has a Quality Grade of A due to a rock-solid balance sheet. The company has a current ratio of 1.7, which indicates that the company has more than enough liquidity to handle short-term obligations.
To access the rest of CDNS' grades (Growth, Value, Momentum, and Stability), click here. CDNS is ranked #17 in the Software-Application industry.
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WORX shares fell $2.69 (-100.00%) in premarket trading Thursday. Year-to-date, WORX has gained 98.50%, versus a 17.08% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
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