Amid consecutive rate hikes and rising recession odds, investor sentiment toward software stocks has deteriorated, as evident from the SPDR S&P Software & Services ETF's (XSW) 3.9% losses over the past month and 36.1% year-to-date losses.

However, demand for software and services has been robust. Also, amid rapid digitalization and tech advancements, the enterprise software industry is expected to generate massive returns in the coming years. The enterprise software market is expected to grow at a CAGR of 9.5% until 2030. Furthermore, revenue in the software market is projected to reach $593.40 billion in 2022.

Given the backdrop, investors could consider buying fundamentally sound software stocks Commvault Systems, Inc. (CVLT) and Rimini Street, Inc. (RMNI).

Commvault Systems, Inc. (CVLT)

CVLT provides data protection and information management software applications and related services globally. The company sells its products and services to large enterprises, small and medium-sized businesses, and government agencies.

On October 25, 2022, CVLT announced the expanded protection for Kubernetes workloads, including fully automated management, replication, migration, and security enhancements. The new features will offer customers simple management and enterprise-grade protection for hybrid, multi-cloud environments and is a solid addition to the company's portfolio.

CVLT's total revenues increased 5.7% year-over-year to $188.06 million for the second quarter that ended September 30, 2022. Gross margin increased 3% year-over-year to $155.76 million. Also, its EPS came in at $0.10, up 150% year-over-year.

Street expects CVLT's revenue to increase 3.6% year-over-year to $797.27 million in 2023. Its EPS is estimated to grow 6% year-over-year to $2.66 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 16.8% to close the last trading session at $64.41.

CVLT has an overall A rating, which equates to a Strong Buy in our POWR Ratings systems. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

CVLT has an A grade for Growth and Quality and a B for Value and Sentiment. Within the Software – Application industry, it is ranked first among 143 stocks. 

Click here to see the additional POWR Ratings for Momentum and Stability for CVLT.

Rimini Street, Inc. (RMNI)

RMNI provides enterprise software products, services, and support for various industries. The company offers software support services for Oracle and SAP enterprise software products. 

On October 02, 2022, Seth A. Ravin, RMNI's co-founder, CEO, and chairman of the board, said, "We believe Rimini Street's portfolio of IT solutions provides the services many organizations need today around their enterprise software systems and provides industry-leading value, ROI and proven engineering capability."

RMNI's revenues came in at $101.93 million for the third quarter that ended September 30, 2022, up 6.6% year-over-year. Its gross profit increased marginally year-over-year to $62.66 million. Also, its current liabilities came in at $288.60 billion for the period ended September 30, 2022, compared to $329.50 billion for the period ended December 31, 2021.

Analysts expect RMNI's revenue to increase 8.4% year-over-year to $405.97 million in 2022. Its EPS is estimated to grow 15% per annum for the next five years. RMNI's shares have gained marginally intraday to close the last trading session at $4.19.

RMNI has an overall B rating, equating to a Buy in our POWR Ratings systems. It has a B grade for Value and Quality. It is ranked #25 out of 143 stocks in the same industry. 

Click here for the additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for RMNI.

CVLT shares were trading at $63.60 per share on Wednesday afternoon, down $0.81 (-1.26%). Year-to-date, CVLT has declined -7.72%, versus a -19.37% rise in the benchmark S&P 500 index during the same period.

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.

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