The SaaS business model is becoming the norm for the software industry. While many SaaS stocks saw huge gains in 2020, this year we need to be more selective. Which is why David Cohne is recommending Salesforce.com (CRM), Microsoft (MSFT), and Adobe (NASDAQ:ADBE) as the top SaaS stocks for May.Twenty years ago, very few companies employed a software-as-a-service (SaaS) business model. But now, that’s changed, as it’s become widespread in the software industry. SaaS is a type of licensing model where access to software is provided on a subscription basis. The software is located on an external server. Customers access it through a web browser instead of on their computers’ hard drives.
The SaaS business model, for the most part, has become synonymous with the rise of the cloud, as software is accessed through the cloud. Software hosted on the cloud not only provides a time-saving option for companies to update their software but is also less expensive for customers. Previously, consumers would have to buy multiple software products at once, which could get quite costly. The SaaS model, on the other hand, makes it much more cost-effective, especially at the front end.
For a SaaS company, the subscription model provides a steady stream of revenue instead of convincing its customers to upgrade to new products. With so many SaaS companies to pick from, it can be difficult for investors to narrow their choices. That’s why I’ve narrowed down my list to SaaS stocks with solid growth catalysts and Buy ratings in our POWR Ratings service, which is why I am highlighting Salesforce.com Inc (NYSE:CRM), Microsoft Corp . (NASDAQ:MSFT), and Adobe Inc. (ADBE) below.