Business automation has become a necessity for companies in today’s complex and rapidly changing environment. Companies require efficient solutions to improve their workflow and enhance their capabilities, and the latest software is able to provide the same. This has led to a rapid demand for advanced software, and the demand will grow further in the future.

Amid this backdrop, it could be wise to add quality software stocks: Salesforce, Inc. (CRM), Open Text Corporation (OTEX), and Progress Software Corporation (PRGS), which are revolutionizing business automation.

Businesses are increasingly investing in the latest software applications to accelerate business automation in order to improve their workflow operations, enhance capabilities, and maintain a competitive position in the industry. The surging demand has resulted in rapid advancements and innovations in software and technologies, offering lucrative opportunities for software companies.

From cost savings to real-time, data-driven decisions and improved customer services, business automation offers a variety of benefits to companies. Further, integration with artificial intelligence (AI), automation, and other tools improves efficiency and enables digital transformation to keep up with the fast-paced world.

These trends have directly impacted the growth trajectory of the global application development software market. In recent times, the adoption of digitalization across businesses and the rising demand for software applications to simplify and accelerate operations have propelled the market growth.

The global application development software market is projected to reach around $862.67 billion by 2028, exhibiting growth at a CAGR of 22.8%. Demand for cloud computing, cloud storage solutions, increasing investments, and the evolution of technologies are driving market demand.

With these encouraging trends in mind, let’s delve into the fundamentals of the three Software – Application stock picks, beginning with the third choice.

Stock #3: Salesforce, Inc. (CRM)

CRM provides Customer Relationship Management (CRM) technology that brings companies and customers together globally. Its service includes sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and artificial intelligence, and deliver quotes, contracts, and invoices.

On December 17, CRM introduced Agentforce 2.0, the newest version of Agentforce, the first digital labor platform for enterprises. The platform is a complete AI system for augmenting teams with trusted, autonomous AI agents in the flow of work. The new advances allow entities to scale their workforce with customized agents capable of handling complex with even more precision and accuracy.

On November 20, CRM announced agentic lifecycle management tools to automate Agentforce testing, prototype agents in secure Sandbox environments, and transparently manage usage at scale. It allows teams to test Agentforce with synthetically generated data, ensuring accurate responses and actions, with complete monitoring of usage and feedback.

CRM reported total revenues of $9.44 billion during the third quarter, which ended October 31, 2024, up 8.3% from the prior year’s quarter. Its gross profit grew 11.8% from the year-ago value to $7.34 billion. Also, CRM’s non-GAAP income from operations of $3.12 billion reflects a 14.9% increase from the previous year period.

In addition, the company’s non-GAAP net income amounted to $2.32 billion and $2.41 per share, indicating growth of 12.2% and 14.2% year-over-year, respectively.

According to the company’s guidance for the fourth quarter, CRM expects revenue in the range of $9.90 billion and $10.10 billion, up 7% – 9% year-over-year.

Also, for the fiscal year 2025, the company raised its low-end revenue guidance between $37.8 billion and $38 billion, up 8% – 9% from the prior year. It has also raised its operating cash flow growth to a range of 24% to 26%.

Analysts expect CRM’s revenue and EPS for the fourth quarter (ending January 2025) to increase 8.1% and 14.2% year-over-year to $10.04 billion and $2.61, respectively. Moreover, the company surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

CRM’s stock has surged 27% over the past six months and 25.3% over the past year to close the last trading session at $326.90.

CRM’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has a B grade for Quality. It is ranked #20 out of 125 stocks in the B-rated Software – Application industry.

Click here to access additional CRM ratings for Value, Sentiment, Stability, Momentum, and Growth.

Stock #2: Open Text Corporation (OTEX)

Headquartered in Waterloo, Canada, OTEX is engaged in the provision of information management products and services. The company offers content services, including content collaboration and intelligent capture, as well as records management, collaboration, e-signatures, and archiving.

On December 5, OTEX announced a strategic partnership with Secure Code Warrior to integrate its dynamic learning platform into the OpenText Fortify application security product suite. The strategic partnership will allow developers to improve their secure coding skills through real-time training to reduce risks, quickly identify and resolve vulnerabilities, and ultimately build greater trust with customers.

On November 19, OTEX unveiled Cloud Editions 24.4. The next-generation cloud, security, and AI-integrated innovations aim to deliver secure, AI-integrated solutions to strengthen data connectivity, streamline workflows, and enhance human potential. The system addresses the needs of forward-thinking CIOs and business leaders navigating multi-cloud environments.

Also, on the same date, the company announced a new Partner Enterprise Learning Subscription. The subscription gives partners the ability to build the needed skills at scale. It helps customers verify that their partner has relevant product-related skills, giving them confidence in their choice of partner.

During the first quarter that ended September 30, 2024, OTEX reported total revenues of $1.27 billion, of which its Cloud services and subscriptions grew 1.3% year-over-year to $457.02 million. Its gross profit was $910.36 million, and adjusted EBITDA was $443.80 million for the quarter.

Also, net income and EPS attributable to OpenText stood at $84.37 million and $0.32, up 4.3% and 6.7% from the prior year’s quarter, respectively.

For the fiscal year (ending June 2026), OTEX’s revenue is expected to increase 2.4% year-over-year to $5.44 billion, while its EPS is expected to improve 13.6% year-over-year to $4.15. Moreover, it has surpassed the consensus EPS estimate in three of the trailing four quarters.

Shares of OTEX have slumped 9.8% over the past month to close the last trading session at $27.87.

OTEX’s POWR Ratings reflect its promising prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has an A grade for Value and B for Growth. OTEX is ranked #16 of 125 stocks within the B-rated Software Application industry.

To see additional POWR Ratings of OTEX for Momentum, Quality, Sentiment, and Stability, Click here.

Stock #1: Progress Software Corporation (PRGS)

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

On December 19, PRGS announced its partnership with the American Institute of CPAs (AICPA), the world’s largest member association representing the CPA profession. PRGS’ Progress® ShareFile®, the SaaS-native, AI-powered, document-centric collaboration platform, has become the only document workflow and secure file-sharing solution in the AICPA Member Discount Program.

On November 21, PRGS released new powerful capabilities and enhancements in Progress® Sitefinity®. With the release, Sitefinity introduced native support for Next.js, a React framework, allowing organizations to leverage one of the fastest-growing frontend frameworks for developers to create modern, state-of-the-art digital experiences.

Also, on October 31, PRGS completed the acquisition of ShareFile, a Cloud Software Group, Inc. business unit, offering a SaaS-native, AI-powered, document-centric collaboration platform, emphasizing industry segments including business and professional services, financial services, industrial, and healthcare.

For the third quarter that ended August 31, 2024, PRGS’ revenue increased 2.1% year-over-year to $178.69 million. Its non-GAAP income from operations grew 8.4% from the year-ago value to $74.12 million. The company’s non-GAAP net income and EPS came in at $55.22 million and $1.26, up 13.3% and 16.7% from the prior year’s quarter, respectively.

As per the updated business outlook for 2024, PRGS expects non-GAAP of $745 million – $755 million. The company expects non-GAAP EPS between $4.75 and $4.85.

Street expects PRGS’ revenue and EPS for the fourth quarter (ended November 2024) to increase 19.1% and 19.3% year-over-year to $211.34 million and $1.22, respectively. Also, the company surpassed the consensus revenue and EPS estimates for all of the trailing four quarters, which is impressive.

PRGS’ shares have gained 16.5% over the past six months and 18.9% over the past year to close the last trading session at $63.33.

PRGS’ sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

The stock has an A grade for Quality. It also has a B grade for Growth and Value. Within the same industry, PRGS is ranked #3 of 125 stocks.

In addition to the POWR Ratings we’ve stated above, we also have PRGS ratings for Momentum, Stability, and Sentiment. Get all PRGS ratings here.

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CRM shares were trading at $317.36 per share on Friday afternoon, down $9.54 (-2.92%). Year-to-date, CRM has declined -5.08%, versus a -1.19% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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