Software is eating the world, and virtually no business is left untouched by it. The undeniable tailwinds fueling the industry have also led to strong returns for SaaS stocks lately as they’ve gained 36.2% over the past six months, outpacing the S&P 500’s 5.3% rise.
However, only a handful of companies will ultimately thrive over the long term as the low barriers to entry for software businesses lead to fierce competition. With that said, here are two resilient software stocks at the top of our wish list and one we would avoid.
One software stock to sell:
F5 (FFIV)
Market cap: $18.44 billion
Originally named after the F5 tornado, the most powerful on the meteorological scale, F5 (NASDAQ:FFIV) provides security and delivery solutions that protect applications across cloud, data center, and edge environments for large organizations.
Why Are We Cautious About FFIV?
- Offerings struggled to generate meaningful interest as its average billings growth of 10.9% over the last year did not impress
- Estimated sales growth of 8.4% for the next 12 months implies demand will slow from its two-year trend
- Static operating margin over the last year shows it couldn’t become more efficient
At $326.01 per share, F5 trades at 5.3x forward price-to-sales. If you’re considering FFIV for your portfolio, see our FREE research report to learn more.
Two software stocks to watch:
CrowdStrike (CRWD)
Market cap: $248.1 billion
Known for detecting the massive SolarWinds hack in 2020 that compromised numerous government agencies, CrowdStrike (NASDAQ:CRWD) provides cloud-based cybersecurity solutions that protect endpoints, cloud workloads, identity, and data through its Falcon platform.
Why Should You Buy CRWD?
- Average billings growth of 26% over the last year enhances its liquidity and shows there is steady demand for its products
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
CrowdStrike’s stock price of $242.15 implies a valuation ratio of 39.3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
SentinelOne (S)
Market cap: $8.06 billion
Built on the principle of "fighting machine with machine," SentinelOne (NYSE:S) provides an AI-powered cybersecurity platform that autonomously prevents, detects, and responds to threats across endpoints, cloud workloads, and identity systems.
Why Are We Fans of S?
- Ability to secure long-term commitments with customers is evident in its 22.2% ARR growth over the last year
- Projected revenue growth of 19.2% for the next 12 months suggests its momentum from the last two years will persist
- Free cash flow margin is anticipated to expand by 9.4 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends
SentinelOne is trading at $23.40 per share, or 6.6x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-quality stocks for all market conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.