Software is rapidly reducing operating expenses for businesses. Companies bringing it to life have been rewarded with high valuation multiples that make fundraising easier, but they have weighed on the returns lately as the industry has pulled back by 1.8% over the past six months. This drawdown is a far cry from the S&P 500’s 14.4% ascent.
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. Taking that into account, here is one software stock poised to generate sustainable market-beating returns and two we’re swiping left on.
Two Software Stocks to Sell:
LiveRamp (RAMP)
Market Cap: $1.86 billion
Serving as the digital middleman in an increasingly privacy-conscious world, LiveRamp (NYSE: RAMP) provides technology that helps companies securely share and connect their customer data with trusted partners while maintaining privacy compliance.
Why Does RAMP Worry Us?
- ARR growth averaged a weak 7.4% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 9% for the next 12 months implies demand will slow from its two-year trend
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
LiveRamp’s stock price of $29.19 implies a valuation ratio of 2.2x forward price-to-sales. If you’re considering RAMP for your portfolio, see our FREE research report to learn more.
Agilysys (AGYS)
Market Cap: $3.53 billion
With a tech stack that powers everything from check-in to checkout at some of the world's top hospitality venues, Agilysys (NASDAQ: AGYS) develops and provides cloud-based and on-premise software solutions for hotels, resorts, casinos, and restaurants to manage operations and enhance guest experiences.
Why Are We Hesitant About AGYS?
- Revenue increased by 15.5% annually over the last five years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Gross margin of 61.8% reflects its relatively high servicing costs
- Operating margin improvement of 2.2 percentage points over the last year demonstrates its ability to scale efficiently
At $127 per share, Agilysys trades at 10.4x forward price-to-sales. To fully understand why you should be careful with AGYS, check out our full research report (it’s free for active Edge members).
One Software Stock to Watch:
Atlassian (TEAM)
Market Cap: $41.24 billion
Started by two Australian university friends who funded their startup with credit cards, Atlassian (NASDAQ: TEAM) provides software tools that help teams plan, track, collaborate, and share knowledge across organizations.
Why Are We Positive On TEAM?
- Market share has increased as its 21.4% annual revenue growth over the last two years was exceptional
- Prominent and differentiated software culminates in a premier gross margin of 83.5%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Atlassian is trading at $155.45 per share, or 6.1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% 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
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