Software is rapidly reducing operating expenses for businesses. In the past, the undeniable tailwinds fueling SaaS companies led to lofty valuation multiples that made it easier to raise capital. But this was a double-edged sword as the high prices exposed them to big drawdowns, and unfortunately, the industry has tumbled by 11.2% over the last six months. This drawdown is a far cry from the S&P 500’s 10% ascent.
A cautious approach is imperative when dabbling in these businesses as the best will deliver robust earnings growth while the rest will be disrupted by competition and AI. Taking that into account, here are three resilient software stocks at the top of our wish list.
Datadog (DDOG)
Market Cap: $41.74 billion
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Why Are We Backing DDOG?
- Ability to secure long-term commitments with customers is evident in its 26.5% ARR growth over the last year
- Forecasted revenue growth of 21.7% for the next 12 months indicates its momentum over the last two years is sustainable
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $119.19 per share, Datadog trades at 11x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
Veeva Systems (VEEV)
Market Cap: $36.53 billion
Originally named "Verticals onDemand" before rebranding in 2009, Veeva Systems (NYSE: VEEV) provides cloud software, data solutions, and consulting services that help life sciences companies develop and bring products to market more efficiently.
Why Are We Fans of VEEV?
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Healthy operating margin of 27.9% shows it’s a well-run company with efficient processes, and it turbocharged its profits by achieving some fixed cost leverage
- Robust free cash flow margin of 43.9% gives it many options for capital deployment
Veeva Systems’s stock price of $222.20 implies a valuation ratio of 10.9x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Toast (TOST)
Market Cap: $19.71 billion
Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE: TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.
Why Do We Like TOST?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
Toast is trading at $33.69 per share, or 2.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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 6 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
