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 make re-ratings harder. Unfortunately, the rich prices have held them back over the past six months as the industry’s gain of 1.1% has fallen short of the S&P 500’s 14.4% rise.
However, some businesses can support their premium valuations with superior earnings growth, and our mission at StockStory is to help you find them. Keeping that in mind, here is one resilient software stock at the top of our wish list and two we’re passing on.
Two Software Stocks to Sell:
Jamf (JAMF)
Market Cap: $1.73 billion
With its name playfully derived from "Just Another Management Framework," Jamf (NASDAQ:JAMF) provides software that helps organizations deploy, manage, and secure Apple devices across their workforce while maintaining a seamless user experience.
Why Are We Hesitant About JAMF?
- ARR growth averaged a weak 12.2% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its two-year trend
- Historical operating margin losses point to an inefficient cost structure
Jamf is trading at $13 per share, or 2.3x forward price-to-sales. Read our free research report to see why you should think twice about including JAMF in your portfolio.
Varonis Systems (VRNS)
Market Cap: $3.98 billion
Beginning with protecting Windows file shares in 2005 and evolving into a comprehensive security platform, Varonis Systems (NASDAQ:VRNS) provides data security software that helps organizations protect sensitive information, detect threats, and comply with privacy regulations.
Why Does VRNS Fall Short?
- 11.7% annual revenue growth over the last two years was slower than its software peers
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 2.7 percentage points
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 1.9 percentage points
Varonis Systems’s stock price of $33.79 implies a valuation ratio of 5.5x forward price-to-sales. Check out our free in-depth research report to learn more about why VRNS doesn’t pass our bar.
One Software Stock to Buy:
AppLovin (APP)
Market Cap: $226.7 billion
Sitting at the crossroads of the mobile advertising ecosystem with over 200 free-to-play games in its portfolio, AppLovin (NASDAQ:APP) provides software solutions that help mobile app developers market, monetize, and grow their apps through AI-powered advertising and analytics tools.
Why Do We Love APP?
- Impressive 30.9% annual revenue growth over the last two years indicates it’s winning market share
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- APP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $667.12 per share, AppLovin trades at 34x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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