From commerce to culture, software is digitizing every aspect of our lives. In the past, the undeniable tailwinds fueling SaaS companies led to lofty valuation multiples that made it easier to raise capital. But this was a double-edged sword as the high prices exposed them to big drawdowns, and unfortunately, the industry has tumbled by 2.7% over the last six months. This drop is a stark contrast from the S&P 500’s 11.7% gain.

Investors should tread carefully as only some businesses are worthy of their valuations, and luckily for you, we started StockStory to help you find them. On that note, here is one software stock poised to generate sustainable market-beating returns and two we’re swiping left on.

Two Software Stocks to Sell:

Okta (OKTA)

Market Cap: $15.61 billion

Named after the meteorological measurement for cloud cover, Okta (NASDAQ: OKTA) provides cloud-based identity management solutions that help organizations securely connect their employees, partners, and customers to the right applications and services.

Why Does OKTA Worry Us?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 10.2% average billings growth over the last year was weak
2. Estimated sales growth of 9.2% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin is forecasted to shrink by 3.7 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors

At $87.84 per share, Okta trades at 5.3x forward price-to-sales. If you’re considering OKTA for your portfolio, see our FREE research report to learn more.

BILL (BILL)

Market Cap: $5.53 billion

Transforming the messy back-office financial operations that plague small business owners, BILL (NYSE: BILL) provides a cloud-based platform that automates accounts payable, accounts receivable, and expense management for small and midsize businesses.

Why Are We Cautious About BILL?

1. Offerings struggled to generate meaningful interest as its average billings growth of 11.9% over the last year did not impress
2. Estimated sales growth of 10.5% for the next 12 months implies demand will slow from its two-year trend
3. Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage

BILL’s stock price of $55.11 implies a valuation ratio of 3.4x forward price-to-sales. To fully understand why you should be careful with BILL, check out our full research report (it’s free for active Edge members).

One Software Stock to Watch:

MongoDB (MDB)

Market Cap: $34.44 billion

Named after "humongous database," reflecting its ability to handle massive data loads, MongoDB (NASDAQ: MDB) provides a flexible document-based database platform that helps developers build, deploy, and maintain modern applications more efficiently.

Why Does MDB Stand Out?

1. ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
2. Projected revenue growth of 19.8% for the next 12 months suggests its momentum from the last two years will persist
3. Free cash flow margin is anticipated to expand by 1.6 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends

MongoDB is trading at $422.78 per share, or 12.8x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.