7 A-Rated Software Stocks to Buy in January

Stocks to buy

Can you imagine what it would be like to suddenly be without computers? Machines are a daily part of our lives, whether we’re at work, school, or home. Computers help us perform work, operate our vehicles and make items in our homes operate more smoothly. Operating all those machines are software, which is why buying A-rated software stocks is a smart investing decision.

Software stocks represent companies that make the programs, data, and instructions that prompt a computer system to perform specific functions. Some companies make and sell system software, which manages hardware and provides operating systems, drivers and utilities.

Then there’s application software, which includes word processing programs, spreadsheets, video editing software, design tools and other products.

All of these are critical for today’s computers to bring the magic of modern technology to life.

We’ll use the Portfolio Grader to pick out some A-rated software stocks based on the companies’ earnings performance, revenue and profit growth, analyst sentiment and momentum. These seven stocks give you the best chance to invest in software companies this January.

Microsoft (MSFT)

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Microsoft (NASDAQ:MSFT) is one of the best software companies on the planet, and it’s one of the biggest companies in the world. Microsoft’s market cap is at $2.85 trillion, putting it on the path to $3 trillion. It could become the largest publicly traded company by year-end.

Microsoft’s Windows operating system is by far the dominant operating system in the U.S., installed on an estimated 63% of desktop computers. It also makes and sells Microsoft 365, a package of software programs that includes Word, Excel, PowerPoint, Outlook, and more. Microsoft 365 has a market share of roughly 48%, and generates more than $60 billion in annual revenue.

Microsoft generated $211.9 billion in revenue for its 2023 fiscal year and $73.4 billion in profit. And its fiscal 2024 year is off to a good start, with revenue in the first quarter (ending Sept. 30, 2023) of $56.5 billion. That’s an increase of 13% from the previous year.

MSFT stock is up 60% in the last year and gets an “A” rating in the Portfolio Grader.

Salesforce (CRM)

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Salesforce (NYSE:CRM) provides cloud-based software that helps businesses manage sales, marketing, customer service and customer workflow.

Its customer relationship management software gives businesses a valuable tool and centralized location that allows them to track and manage client information, whether they’re in the office or using a mobile device.

Its Einstein platform uses the power of generative artificial intelligence to customize client interactions, summarize emails, and draft responses. That’s an important tool in providing outstanding customer service.

The company posted revenue of $8.72 billion in the third fiscal quarter of 2024 (ending Oct. 31, 2023), which was an increase of 11% from the previous year. Analysts expect Salesforce to generate earnings per share of $9.56 in 2024.

CRM stock is up 80% in the last year and gets an “A” rating in the Portfolio Grader.

Cadence Design Systems (CDNS)

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Cadence Design Systems (NASDAQ:CDNS) provides software to power electronic systems, such as semiconductors and circuit boards.

That’s a lucrative business today, as computer manufacturers are scrambling to design chips and servers that can handle Internet of Things applications, generative AI and machine learning.

Cadence has a hand in some of the most talked-about products on the market today. For example, it partnered with Tesla (NASDAQ:TSLA) to help design full self-driving and SOJO AI supercomputer chips that Tesla’s new Cybertruck uses for car navigation, computer vision video processing and recognition.

Earnings for the third quarter were $1.02 billion in revenue, an increase from $903 million in the previous year. Net income was $254 million and 93 cents per share, up from $186 million and 68 cents per share a year ago.

CDNS stock is up 55% in the last year and gets an “A” rating in the Portfolio Grader.

CleanSpark (CLSK)

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CleanSpark (NASDAQ:CLSK)  is a miner of Bitcoin (BTC-USD). It owns and operates five data centers in Georgia and one in Massena, New York. It fully owns the Georgia centers and co-operates the data center in New York.

CleanSpark has nearly 89,000 Bitcoin miners and holds just over 3,000 Bitcoin. It mines at 10 exahashes per second, which it partly attributes to its optimized software.

And that should only be the beginning. CleanSpark has a deal to purchase up to another 160,000 miners, giving it another 32 exahashes per second of production.

And as the price of Bitcoin continues to increase (particularly now that it can be traded through Bitcoin ETFs) CleanSpark’s profits should also rise.

Revenue for the 2023 fiscal year (ending September 30, 2023) was $168.4 million, up 28% from a year ago. And while the net loss increased due to CleanSpark scaling up, I expect major steps toward profitability in 2024.

CLSK stock is up more than 300% in the last year and gets an “A” rating in the Portfolio Grader.

SilverSun Technologies (SSNT)

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SilverSun Technologies (NASDAQ:SSNT) is a New Jersey technology and consulting company that buys and builds out technology and software companies.

It offers digital transformation expertise for accounting and business management, financial reporting, warehouse management, customer relations and business intelligence, all designed to help software companies improve customer experiences, be more efficient, generate revenue and pivot in response to changing conditions.

While headquartered in New Jersey, the company focuses on the New York metropolitan area as well as Chicago, Arizona, North Carolina, Washington, Oregon and southern California.

Revenue in the third quarter was $13.4 million, an increase of 23% from the previous year. And while the company posted a net loss of $2.1 million, that’s an outlier as it had a nearly $3 million additional expense from its terminated merger with Rhodium Enterprises.

The company’s stock soared in December when billionaire Brad Jacobs reached a $1 billion investment deal with SilverSun that will lead to him being the majority shareholder and chief executive and chairman. As part of the deal, the existing business will be spun off to SilverSun shareholders, and Jacobs will keep the remaining company as a standalone company that will operate under a new name.

That’s why you now see SSNT stock up 430% in the last year. The spinoff could be a lucrative opportunity.

ServiceNow (NOW)

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ServiceNow (NYSE:NOW) is a California-based software company that operates a cloud computing platform that provides digital workflow management tools.

It also has a partnership with Nvidia (NASDAQ:NVDA) that allows it to use Nvidia’s software and infrastructure to develop large language models for ServiceNow’s platform in exchange for Nvidia using ServiceNow’s workflow management to help it develop better semiconductor chips and generative AI.

Considering that Nvidia is the No. 1 name in generative AI, ServiceNow’s partnership got much attention and investor interest.

Not surprisingly, 2023 was a great year for the cloud computing company. ServiceNow reported third-quarter revenue of $2.28 billion, up 25% from a year ago. Subscription revenue of $2.21 billion was up 27% from last year.

NOW stock is up 77% in the last year and gets an “A” rating in the Portfolio Grader.

Duolingo (DUOL)

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Duolingo (NASDAQ:DUOL) is an education technology company. Its software includes courses in music, math and more than 30 languages.

It also uses AI to provide tailored, personalized lessons that accelerates or slows depending on the user and their needs.

The company has more than 83 million monthly active users, and more than 24.2 million daily active users. That’s up 47% and 63%, respectively, in just one year.

The company’s also getting more efficient. It announced it dismissed about 10% of its contracted workforce because the work can be done through generative AI. While that’s not great news for workers, a leaner, trimmer workforce is always welcomed by shareholders.

Revenue in the third quarter was $137.6 million, up 43% from a year ago. DUOL stock is up 167% in the last year and gets an “A” rating in the Portfolio Grader.

On the date of publication, Louis Navellier had long positions in NVDA and MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article had long positions in TSLA, NVDA and BTC-USD. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.

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