Software is eating the world, and virtually no business is left untouched by it. This secular theme makes SaaS companies attractive investment candidates but also comes with higher valuations that cause volatility. Unfortunately, the rich prices have haunted them over the past six months as the industry has shed 22%. This drop is a far cry from the S&P 500’s 3% ascent.
However, some businesses can support their premium valuations with superior earnings growth, and our mission at StockStory is to help you find them. Taking that into account, here are two software stocks we think can generate sustainable market-beating returns and one best left ignored.
One Software Stock to Sell:
Qualys (QLYS)
Market Cap: $3.45 billion
Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ: QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.
Why Does QLYS Give Us Pause?
- Products, pricing, or go-to-market strategy may need some adjustments as its 8.3% average billings growth over the last year was weak
- Estimated sales growth of 7.8% for the next 12 months implies demand will slow from its two-year trend
- Operating margin improvement of 2.4 percentage points over the last year demonstrates its ability to scale efficiently
At $96.71 per share, Qualys trades at 4.8x forward price-to-sales. Check out our free in-depth research report to learn more about why QLYS doesn’t pass our bar.
Two Software Stocks to Watch:
Veeva Systems (VEEV)
Market Cap: $30.75 billion
Originally named "Verticals onDemand" before rebranding in 2009, Veeva Systems (NYSE: VEEV) provides cloud software, data solutions, and consulting services that help life sciences companies develop and bring products to market more efficiently.
Why Do We Like VEEV?
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Highly efficient business model is illustrated by its impressive 28.7% operating margin, and its profits increased over the last year as it scaled
- Strong free cash flow margin of 43.4% enables it to reinvest or return capital consistently
Veeva Systems is trading at $184.89 per share, or 8.9x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
Doximity (DOCS)
Market Cap: $4.55 billion
With over 80% of U.S. physicians as members of its digital community, Doximity (NYSE: DOCS) operates a digital platform that enables physicians and other healthcare professionals to collaborate, stay current with medical news, manage their careers, and conduct virtual patient visits.
Why Does DOCS Stand Out?
- Billings have averaged 17.1% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Robust free cash flow margin of 48.2% gives it many options for capital deployment
Doximity’s stock price of $24.28 implies a valuation ratio of 7.3x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
