© Reuters. 2 Software Stocks That Are a Better Buy Than BlackberryBlackBerry’s (BB) shares have generated significant returns over the past few months riding the meme frenzy. However, its lofty valuations are not in sync with its fundamentals. So, it’s better to bet on established and fundamentally-sound software companies such as Microsoft (MSFT) and VMware (NYSE:) to cash in on industry tailwinds.Being one of Reddit favorites, shares of software company BlackBerry Limited (NYSE:) soared to hit its 52-week high of $28.77 on January 27, 2021. In fact, the stock rallied 103.8% year-to-date and 59.1% over the past month. However, BB is currently trading at an expensive valuation which doesn’t justify its fundamentals. In terms of forward EV/EBITDA, BB’s 159.50x is 835.3% higher than the industry average of 17.05x. Its forward P/CF of 75.06x is 227.3% higher than the industry average of 22.93x. So, they could be due for a pullback.
While BB may not be a good bet right now, the solid growth prospects of the software industry owing to increasing demand for advanced software in almost every industry should drive the performance of many fundamentally-sound software stocks in the near term. According to Grand View Research, the global business software and services market is expected to grow at a CAGR of 11.3% between 2021 and 2028.
So, it’s wise to bet on established software companies such as Microsoft Corporation (NASDAQ:) and VMware, Inc. (VMW) that have solid financials and are expected to generate significant returns in upcoming months.
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