12 Best Software Stocks to Buy According to Analysts

10. VTEX (NYSE:VTEX)

Stock Price: $6.10

Number of Hedge Fund Holders: 11

Analyst Upside Potential: 55.74%

VTEX (NYSE:VTEX) is a cloud-based software company that offers one-stop software solutions for online retailers. The company not only provides a software-as-a-service e-commerce platform that allows companies to create and manage online stores but also enables omnichannel retailing, as businesses can sell through various channels using its platform.

One of the key features that differentiate the platform is its marketplace offering which allows retailers to build their online marketplaces where multiple sellers can offer products. The company operates in over 43 countries and supports more than 3,500 active online stores. It has established itself as a leader in the digital commerce space, particularly in Latin America, and continues to expand its global presence.

VTEX (NYSE:VTEX) has made notable advancements in its financial performance and strategic positioning, particularly regarding its Rule of 40 metric, which combines revenue growth and profitability. The company achieved a Rule of 40 score of 32% in fiscal Q3 2024, an improvement from 28% in the same period last year. This metric is significant as it indicates a healthy balance between growth and profitability, essential for SaaS companies. During the third quarter, the company grew its subscription revenue by 22%, whereas gross profits rose by 28%, achieving a margin of 74%. Management remains optimistic to reach the 40% target, as discussed during their investor day last year, suggesting that they are on track to enhance both their revenue growth and profit margins in the coming quarters. It is one of the 12 best software stocks to buy according to analysts.