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 24.1% over the last six months. This performance was significantly worse than the S&P 500’s 2.8% loss.

However, some businesses can support their premium valuations with superior earnings growth, and our mission at StockStory is to help you find them. Keeping that in mind, here are two resilient software stocks at the top of our wish list and one that may face trouble.

One Software Stock to Sell:

Sprout Social (SPT)

Market Cap: $333.5 million

Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ: SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.

Why Is SPT Not Exciting?

1. Average billings growth of 8.7% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Estimated sales growth of 7.8% for the next 12 months implies demand will slow from its two-year trend
3. Rapid expansion strategy came at the expense of operating margin profitability

Sprout Social’s stock price of $5.61 implies a valuation ratio of 0.7x forward price-to-sales. To fully understand why you should be careful with SPT, check out our full research report (it’s free).

Two Software Stocks to Watch:

HubSpot (HUBS)

Market Cap: $12.8 billion

Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE: HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.

Why Are We Fans of HUBS?

1. Average billings growth of 22.5% over the last year enhances its liquidity and shows there is steady demand for its products
2. Forecasted revenue growth of 18.1% for the next 12 months indicates its momentum over the last two years is sustainable
3. Superior software functionality and low servicing costs result in a stellar gross margin of 83.8%

At $242.18 per share, HubSpot trades at 3.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.

ServiceNow (NOW)

Market Cap: $108.8 billion

Built on a single code base that processes more than 80 billion workflows and 6.5 trillion transactions annually, ServiceNow (NYSE: NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.

Why Do We Love NOW?

1. Ability to secure long-term commitments with customers is evident in its 21% ARR growth over the last year
2. Healthy operating margin of 13.7% shows it’s a well-run company with efficient processes, and its rise over the last year was fueled by some leverage on its fixed costs
3. Strong free cash flow margin of 34.9% enables it to reinvest or return capital consistently

ServiceNow is trading at $103.37 per share, or 6.8x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.