Digitization is driving the software market’s growth. However, advertising software start-up Phunware (PHUN), which is linked to former President Donald Trump, does not look financially fit enough to capitalize on the industry tailwinds. Therefore, we think it could be worth betting instead on software stocks Rimini Street (NASDAQ:RMNI), NetSol (NTWK), Evolving Systems (EVOL), and SilverSun (SSNT). These stocks are currently trading at less than $10 but possess strong fundamentals. So, read on.A growing dependency on data insights, data storage, and various other cloud-based services by small and large enterprises due in large measure to the continuing remote lifestyle has fueled the software market's growth. Businesses are spending billions of dollars on software to upgrade and improve their business processes. According to a Gartner (NYSE:IT) report, worldwide public cloud end-user spending is expected to grow 23% in 2021. The global software market is expected to reach $823.71 billion by 2026, registering a 7.2% CAGR.. Investors’ interest in the software industry is evidenced by the iShares Expanded Tech-Software Sector ETF’s (IGV) 22.4% returns over the past six months.
Although shares of advertising software start-up Phunware, Inc. (PHUN)—which is linked to former President Donald Trump—skyrocketed in price in October due to the Trump-related frenzy on major Reddit forums, its revenues decreased 31% year-over-year to $2.16 million in its last reported quarter. Its gross profit declined 49.2% from its year-ago value to $1.13 million. While the stock gained 290.5% in price over the past three months, it has lost 61.3% over the past month. The stock began retreating after the ex-president detailed his social media plans in October. Considering PHUN’s weak financials, we think the stock is best avoided now.
We think fundamentally sound software stocks Rimini Street, Inc. (RMNI), NetSol Technologies, Inc. (NTWK), Evolving Systems, Inc. (EVOL), and SilverSun Technologies, Inc. (SSNT), which are currently trading at less than $10, could be ideal bets instead to capitalize on the industry’s solid growth prospects.