Software Stocks Have Lost Their Sheen, But These Players Could Outperform

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our theme mid-cap software stocks, That includes software players with a market cap between $2 billion and $10 billion, and have grown their revenue by at least 50% over the past two years, who have underperformed. The subject remains down about 36% year-on-year in 2022. In comparison, the S&P 500 is down 22% year-over-year, with the Nasdaq-100 down about 31%. With US inflation rising and interest rates rising at a pace faster than anticipated by the Federal Reserve, investors are exiting high-growth, high-multiple technology stocks. There are also concerns about the US economy, with the prospect of a recession rising in the coming quarters as the yield curve inverts. In addition, the tailwind that software companies saw earlier in the pandemic from the remote work trend is calming down, with employees returning to the office.

So how’s the outlook for the subject? Last week, the Fed raised interest rates by 0.75%, its biggest hike since 1994, and a similar hike is likely as inflation remains very high. Rising yields can make bonds more attractive, effectively weaning people out of risky high-multiple stocks and mid-cap names into themed, large numbers of which are causing losses. That said, we still think the subject could remain a pretty strong bet for a few reasons over the long term. Total spend on software is likely to remain strong due to greater digitization of the business and a broader pivot of the software industry to the cloud and a more stable, recurring revenue model. This should help our subject shares, given that they provide some exclusive, yet established software and services. Recent improvements may present a good entry point into the topic.

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within our subject, unplanned stock It is the largest in terms of valuation, with a market cap of close to $10 billion. The stock is one of the best performers in our subject, rising nearly 39% year-over-year, following a buyout by private equity firm Thoma Bravo. posture stockOne company that sells mobile work management platforms is the fastest growing company, with revenue up 87% over the past 12 months. Viva Systems Stock One of the most profitable stocks in our theme, with an operating margin of approximately 25% over the past 12 months.

Stock prices across sectors have fallen sharply in recent months and we are now in a bear market for the first time since March 2020, when the COVID-19 outbreak triggered a market crash. We capture key trends in the Dow during and after major market crashes in our interactive dashboard analysis.market crash comparison,

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