3 Enterprise Software Stocks To Buy Now

2017 has been the year of the tech stock. Across nearly every industry of the technology sector, shares have soared on the back of increased demand and shifting consumer habits. Interestingly, one of the most in-demand segments of the tech market this year has been enterprise software, largely due to widespread adoption of new technologies by large businesses and corporations.

As we head into the New Year, enterprise software companies look poised for another strong run. Cloud computing is continuing to get more affordable, and the advent of artificial intelligence presents new uses for large chunks of data. This could help enterprise tech firms become the hottest stocks in the tech sector throughout 2018.

With that said, check out these three enterprise software stocks to buy now:

1. Cadence Design Systems, Inc. ( (NASDAQ:CDNS) )

Cadence is a leading designer of electronic design automation software and produces solutions for semiconductors, computer systems, and consumer electronics, among other things. Cadence shares have been on a strong two-year run, including a 73.5% surge in 2017 alone. The stock is currently a Zacks Rank #2 (Buy).

Based on our current consensus estimates, Cadence is expected to finish its current fiscal year with earnings growth of 15.5%. The company’s earnings are projected to swell an additional 7.9% next year. The stock’s P/E of 31.31 is a bit bloated, but it actually comes in lower than the “Computer – Software” industry’s average, so investors could be getting a comparatively decent price for CDNS right now.

2. Red Hat, Inc. ( (NYSE:RHT) )

Red Hat is a leading provider of open-source software and enterprise IT solutions, including cloud computing. The company has a strategic partnership with Amazon’s (NASDAQ:AMZN) Web Services unit and is rapidly growing its cloud offerings. Red Hat just surpassed earnings estimates again and remains a Zacks Rank #2 (Buy).

Shares of the software firm actually slipped in the wake of the company’s earnings and revenue beat, but we think this could be an opportunity to buy on the dip. Subscription revenue for app development and emerging tech, a key growth catalyst for the company, was up 44%. And guidance for the upcoming quarter was higher than analyst expectations.

3. Splunk Inc. ( (NASDAQ:SPLK) )

Splunk provides a software platform, which collects and indexes data and enables users to search, correlate, analyze, monitor and report on this data, all in real time. The stock is up over 64% this year and is currently sporting a Zacks Rank #2 (Buy).

Splunk is an exciting pick for growth investors and currently rocks an “A” grade in the Growth category of our Style Scores system. The company is expected to expand its earnings by 41.9% in the current fiscal year. Its earnings are also expected to grow at an annualized rate of 29% over the next three to five years. What’s more, management is expanding its cash flow by 15% right now.

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