At the moment, the Zacks Internet-Software Industry is currently in the top 14% of nearly 250 Zacks industries.

Among the space, several intriguing software stocks are starting to stand out after exceeding their third-quarter top and bottom line expectations earlier in the month. Sporting a Zacks Rank #1 (Strong Buy), here are three of these highly ranked software stocks to consider.

 

Five9 - FIVN

Providing cloud software for contact centers, Five9 FIVN shares look poised for an extended rebound and are making the argument for being in oversold territory. Trading under $40 a share compared to its 52-week high of $90, FIVN is at a more reasonable 15.7X forward earnings multiple. Plus, Five9’s annual EPS is now expected to increase 15% in fiscal 2024 and is projected to expand another 8% in FY25 to $2.56 per share.

Five9 is also expecting sales growth of over 10% in FY24 and FY25 with projections edging north of $1 billion. Reassuringly, Five9 was able to beat Q3 earnings and sales estimates by 15% and 3% respectively with FIVN checking an “A” Zacks Style Scores grade for both Growth and Momentum.

Image Source: Zacks Investment Research

 

Fortinet - FTNT

Security software provider Fortinet FTNT has seen its stock rise over +50% in 2024 after recently hitting an all-time high of $100. Notably, FTNT checks a “B” Style Scores grade for Growth and an “A” for Momentum.

Fortinet was able to post Q3 earnings and sales surprises of 23% and 2%. Furthermore, Fortinet has been able to achieve record gross margins and operating margins which makes its growth trajectory more compelling.

Image Source: Zacks Investment Research

 

Toast - TOST

Rounding out the list is Toast TOST, which provides software that helps restaurants build an on-demand network for online and dine-in orders. Toast has been one of the top-performing stocks in 2024 with TOST skyrocketing over +130% year to date.

Sitting at 52-week highs of $42 a share, the rally in TOST could continue after Toast posted a surprise profit of $0.07 a share compared to Q3 estimates of $0.01. Going public in 2021, Toast is expected to cross the profitability line in FY24 and is projected to post stellar EPS growth in FY25 with projections at $0.39.

Optimism for Toast’s future earnings potential has been reflected in its rapid top line expansion with total sales projected to increase 27% in FY24 and forecasted to expand another 24% in FY25 to $6.13 billion. TOST has an “A’’ Style Scores grade for Growth and a “B” for Momentum.

Image Source: Zacks Investment Research