3 Software Stocks With Strong Buy Signals This Week – TradingView News

The app market is growing due to strong demand for their ability to streamline operations, increase productivity, drive innovation and provide seamless user experiences, driving digital transformation. Excitement about artificial intelligence, DevSecOps, cloud-based mobile applications, beacon technology and IoT is further boosting the sector’s prospects.

Therefore, investors could consider investing in fundamentally strong software stocks Progress Software Corporation (PRGS), Magic Software Enterprises Ltd. (MGIC), and Cognyte Software Ltd. (CGNT). Notably, this stock is rated A in our proprietary POWR Ratings system.

The growth of the app sector is driven by increased automation, customer-centric software and generative artificial intelligence, with double-digit revenue growth expected by 2027. Despite recent market fluctuations, database and customer service applications are the fastest growing. The software market is expected to grow at a CAGR of 5.3% from 2024 to 2028, reaching $858.10 billion.

As a result, the app sector is growing due to increasing demand for mobile apps, driven by increased smartphone usage and competition. Adapting to new app development trends is crucial to achieving business success in today’s technology-driven world. The global mobile application market is expected to grow significantly during 2024-2033 at a CAGR of 21.55%.

Moreover, the software sector is set for growth this year, especially in the mobile app economy. Trends such as increased consumer spending, new monetization paths in social apps, artificial intelligence-driven experiences, personalized interactions, channel diversification and a focus on user privacy due to regulatory changes continue to shape the development of the industry.

Now let’s take a closer look at the software fundamentals – the application resources mentioned above, starting with the third choice.

Stock #3: Progress Software Corporation (PRGS)

PRGS develops, implements and manages business applications internationally. The company offers OpenEdge, Chef, Developer Tools, Kemp LoadMaster, Sitefinity, MOVEit, DataDirect, WhatsUp Gold, Flowmon, Corticon, MarkLogic and Semaphore.

On May 7, 2024, PRGS announced that PruTech has leveraged Progress DataDirect connectors to accelerate and scale cloud migration for a leading health insurer, saving customers months of development time by automating complex encryption processes.

This solution, Secure Database Gateway, increases data connectivity and security, offering significant benefits for cloud migration projects.

On April 10, 2024, PRGS announced the release of Sitefinity 15.1, packed with advanced AI features for conversion optimization, content classification, and faster performance.

The update includes AI-powered conversion propensity scoring, AI-powered content classification, and support for ASP.NET Core in .NET 8, improving productivity and digital experience.

In terms of gross profit margin for the trailing 12 months, the PRGS of 85.82% is 72.9% higher than the industry average of 49.65%. Similarly, the 12-month leveraged FCF margin of 27.44% is 173.9% higher than the industry average of 10.02%. Moreover, the 12-month return on total assets of 4.47% is 198.3% higher than the industry average of 1.50%.

PRGS revenues for the fiscal first quarter ended February 29, 2024 increased 11.5% year-over-year to $184.69 million. The company’s non-GAAP operating income increased 6% from the year-ago quarter to $76.76 million.

Additionally, the company’s non-GAAP net income and non-GAAP EPS were $55.93 million and $1.25, up 6% and 5% year-over-year, respectively.

Street expects PRGS EPS and revenue for the quarter ending August 31, 2024 to increase 12.3% and 4.4% year-over-year to $1.21 million and $183.52 million, respectively. It topped Street EPS estimates in each of the four consecutive quarters. The stock price has declined slightly over the past month, closing at $50.07 in the latest session.

POWR PRGS Ratings Reflect Good Outlook. It has an overall rating of A, which in our proprietary system means Strong Buy. POWR Ratings rate stocks based on 118 different factors, each with its own weighting.

It ranks 13th out of 137 companies in the Software – Applications industry. It is rated B for value and quality. Click here to see PRGS ratings for growth, momentum, stability and sentiment.

Stock #2: Magic Software Enterprises Ltd. (MGIC)

Headquartered in Or Yehuda, Israel, MGIC provides proprietary application development, vertical software solutions, business process integration, information technology (IT) outsourcing services, and cloud-based services in Israel and abroad. It operates in the software services segment and the professional IT services segment.

In terms of trailing 12-month net profit margin, MGIC’s 6.83% is 154.8% higher than the industry average of 2.68%. The trailing 12-month asset turnover ratio of 0.99x is 61.6% higher than the industry average of 0.61x. Additionally, MGIC’s 12-month return on total capital of 9.29% is 245.9% higher than the industry average of 2.69%.

For the fiscal first quarter ended March 31, 2024, MGIC’s revenue was $130.72 billion. Non-GAAP operating income was $18.14 billion. Additionally, the company’s non-GAAP net income and non-GAAP EPS were $11.28 billion and $0.23, respectively. Moreover, as of March 31, 2024, the company’s total assets were $536.52 million compared to $522.41 million as of December 31, 2023.

Analysts expect MGIC’s EPS for the quarter ending September 30, 2024 to increase 16% year over year to $0.24. Its revenue for the quarter ending December 31, 2024 will increase 14.6% year-over-year to $143.90 million. Over the past six months, the company’s stock has gained 16.7%, closing at $10.93 in the most recent session.

MGIC’s positive outlook is reflected in POWR’s ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

It ranks 12th in the same industry. It is rated A for value and B for stability, sentiment and quality. To see MGIC’s growth and momentum ratings, click here.

Stock #1: Cognyte Software Ltd. (CGNT)

Headquartered in Herzliya, Israel, CGNT provides forensics software to governments and enterprises around the world. Its Actionable Intelligence for a Safer World is open source software designed to help governments and businesses speed up and improve the effectiveness of investigations.

On May 8, 2024, CGNT announced the receipt of an additional $5 million order from a national intelligence organization in EMEA for its Threat Identification and Prevention solution, marking three orders from this customer in a year and showcasing the effectiveness and value of CGNT’s technology for increasing operational efficiency. This significant order further strengthens CGNT’s position as a trusted provider of cutting-edge security solutions in the region.

In terms of asset turnover ratio over the last 12 months, CGNT’s ratio of 0.68x is 11.8% higher than the industry average of 0.61x. Similarly, the trailing 12-month gross profit margin of 68.73% is 38.4% higher than the industry average of 49.65%.

For the fiscal year ended January 31, 2024, CGNT reported total non-GAAP revenues of $313.52 million, representing slightly year-over-year growth. Non-GAAP gross profit increased 9.2% from the prior year to $217.04 million.

Adjusted EBITDA was $9 million compared to an adjusted EBITDA loss of $51.47 million in the prior-year quarter. Additionally, as of January 31, 2024, CGNT’s total assets were $472.08 million compared to $443.08 million as of January 31, 2023.

For the fiscal quarter ended April 30, 2024, CGNT revenues are expected to grow 12% year-over-year to $82.05 million. The stock has gained 71.5% over the past year, closing at $7.70 in the most recent session.

CGNT’s strong fundamentals are reflected in its POWR Ratings. It has an overall grade of A, making it a strong buy in our proprietary rating system.

It has a B rating for growth, sentiment and quality. It ranks 9th in the Software – Applications industry. To access additional POWR Ratings for CGNT for Value, Momentum and Stability, click here.

What to do next?

43-year investing veteran Steve Reitmeister just released his 2024 market forecasts along with his trading plan and 11 top picks for the coming year.

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PRGS stock was trading at $49.87 per share on Wednesday afternoon, down $0.20 (-0.40%). Year-to-date, PRGS is down -7.85% compared to the benchmark S&P 500 Index’s gain of 11.02% over the same period.