12 Best Software Stocks to Buy According to Analysts

9. Alight, Inc. (NYSE:ALIT)

Stock Price: $6.79

Number of Hedge Fund Holders: 40

Analyst Upside Potential: 62.00%

Alight, Inc. (NYSE:ALIT) is a leading cloud-based technology company focused on managing human resources (HR) and employee benefits. Through its Alright Worklife platform, the company provides Human Capital Management and Employee Benefits Administration services to more than 50% of Fortune 500 and around 70% of Fortune 100 companies.

Polen US Small Company Growth Strategy during its Q3 2024 investors letter decided to exit its positions from Alight, Inc. (NYSE:ALIT) stating they were not satisfied with the company’s plan and the new standalone business. However, management remains optimistic regarding the future of the company mainly on the back of improved profitability during the fiscal third quarter and new partnerships signed during the quarter.

Although the quarterly revenue decreased slightly by 0.4% year-over-year to $555 million due to lower volumes and project revenues, as well as the winding down of certain business operations. On the bright side, the gross profit margins improved from 29.8% in the previous year to 31.4% during the current year. In terms of new partnerships, Alight, Inc. (NYSE:ALIT) signed notable companies including Hewlett Packard Enterprise, Nokia, and Siemens, indicating increased revenue growth in the coming quarter.

As a result, management now expects revenue of $665 million to $685 million, indicating a $10 million increase at the midpoint versus the previous 2nd half guidance. Moreover, management also expects an adjusted EBITDA ranging from $208 million to $233 million, pointing towards optimism for continued growth despite recent challenges. Here’s what Polen U.S. Small Company Growth Strategy stated the following regarding Alight, Inc. (NYSE:ALIT) in its Q3 2024 investor letter:

“We exited four positions during the quarter, including SiTime, AppFolio, RH, Doximity, and Alight, Inc. (NYSE:ALIT). Our position in Alight, a benefits outsourcing, and business process-as-a-service company, was an unsuccessful investment. We decided to move on due to activist pressure that led to a breakup of the business. We were dissatisfied with both the plan and the new standalone business. This culminated with the CEO leaving and uncertainty over the company’s long-term strategic direction. As a result, we felt it was time to move on with better investment ideas in our pipeline.”