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 9.4% over the last six months. This performance was worse than the S&P 500’s 5.5% decline.
However, some businesses can support their premium valuations with superior earnings growth, and our mission at StockStory is to help you find them. With that said, here is one resilient software stock at the top of our wish list and two we’re passing on.
Two Software Stocks to Sell:
Bandwidth (BAND)
Market Cap: $418.8 million
Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ: BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.
Why Do We Avoid BAND?
- 13.9% annual revenue growth over the last three years was slower than its software peers
- Estimated sales growth of 2.6% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 38% reflects its high servicing costs
Bandwidth’s stock price of $13.80 implies a valuation ratio of 0.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BAND.
PTC (PTC)
Market Cap: $19.55 billion
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ: PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
Why Are We Wary of PTC?
- 7.7% annual revenue growth over the last three years was slower than its software peers
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 4.8% underwhelmed
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
PTC is trading at $164.30 per share, or 7.5x forward price-to-sales. Read our free research report to see why you should think twice about including PTC in your portfolio.
One Software Stock to Watch:
Braze (BRZE)
Market Cap: $3.52 billion
Founded in 2011 after the co-founders met at NYC Disrupt Hackathon, Braze (NASDAQ: BRZE) is a customer engagement software platform that allows brands to connect with customers through data-driven and contextual marketing campaigns.
Why Are We Fans of BRZE?
- Ability to secure long-term commitments with customers is evident in its 26.8% ARR growth over the last year
- Customers use its software daily and increase their spending every year, as seen in its 114% net revenue retention rate
- Operating margin improvement of 10.1 percentage points over the last year demonstrates its ability to scale efficiently
At $34.39 per share, Braze trades at 5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
