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 7.4%. This performance is a noticeable divergence from the S&P 500’s 5.3% return.

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 resilient software stock at the top of our wish list and two that may face trouble.

Two Software Stocks to Sell:

Tenable (TENB)

Market Cap: $3.70 billion

Founded in 2002 by three cybersecurity veterans, Tenable (NASDAQ: TENB) provides software as a service that helps companies understand where they are exposed to cyber security risk and how to reduce it.

Why Do We Think Twice About TENB?

1. Annual revenue growth of 15.8% over the last three years was below our standards for the software sector
2. Estimated sales growth of 7.4% for the next 12 months implies demand will slow from its three-year trend
3. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1.5 percentage points over the next year

At $30.59 per share, Tenable trades at 3.6x forward price-to-sales. If you’re considering TENB for your portfolio, see our FREE research report to learn more.

UiPath (PATH)

Market Cap: $6.00 billion

Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE: PATH) makes software that helps companies automate repetitive computer tasks.

Why Does PATH Give Us Pause?

1. Average billings growth of 4.2% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
3. Historical operating margin losses point to an inefficient cost structure

UiPath is trading at $11.29 per share, or 3.9x forward price-to-sales. To fully understand why you should be careful with PATH, check out our full research report (it’s free).

One Software Stock to Watch:

Toast (TOST)

Market Cap: $26.78 billion

Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE: TOST) provides integrated point-of-sale (POS) hardware, software, and payments solutions for restaurants.

Why Are We Positive On TOST?

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. Sales outlook for the upcoming 12 months implies the business will stay on its desirable three-year growth trajectory
3. Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage

Toast’s stock price of $45.81 implies a valuation ratio of 4.2x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

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 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

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