The software industry is anticipated to thrive amid growing digitization across industries. Given the industry’s solid growth prospects, investors could consider buying fundamentally sound software stocks such as Mitek Systems, Inc. (MITK – Get Rating), Progress Software Corporation (PRGS – Get Rating), and MarketWise, Inc. (MKTW – Get Rating) for solid returns.
Before delving deeper into their fundamentals, let’s discuss what’s happening in the software industry.
The demand for software applications has expanded significantly with increasing investments in digitalization. As a result, the number of software development companies catering to these demands has increased.
The application development software market is expected to reach $1.04 trillion by 2030, increasing at a 25.5% CAGR. The market for application development software is likely to expand due to the rising need for scalable and customized software applications.
According to Statista, software market revenue is expected to hit $659 billion this year. Moreover, the sector’s revenue is expected to grow at a 5.4% CAGR over the next five years to $858.10 billion by 2028. Investors’ interest in software stocks is evident from the iShares Expanded Tech-Software Sector ETF’s (IGV) 30.5% over the past nine months.
In light of these encouraging trends, let’s look at the fundamentals of the three top-rated Software – Application stocks, beginning with number 3.
Stock #3: Mitek Systems, Inc. (MITK – Get Rating)
MITK provides mobile image capture and digital identity verification solutions worldwide. The company offers Mobile Deposit, Mobile Verify, Mobile Fill, and MiSnap products for remote depositing checks, identity verification, and form fill completion. It also provides an intuitive mobile-capture software for instant image capture.
MITK’s forward non-GAAP P/E multiple of 11.16 is 47.9% lower than the industry average of 21.44. Its forward EV/EBITDA multiple of 9.81% is 26.3% lower than the industry average of 13.31.
MITK’s trailing-12-month ROCE of 4.82% is 317.3% higher than the industry average of 1.16%. Its trailing-12-month levered FCF margin of 21.38% is 190% higher than the 7.37% industry average.
During the second quarter ended…
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