1 Software Stock for Long-Term Investors and 2 We Turn Down

Barchart·03/25/2026 02:16:13

Software is eating the world, and virtually no business is left untouched by it. This secular theme makes SaaS companies attractive investment candidates but also comes with higher valuations that cause volatility. Unfortunately, the rich prices have haunted them over the past six months as the industry has shed 25.2%. This drop was especially disheartening since the S&P 500 held its ground.

Investors should tread carefully as only some businesses are worthy of their valuations, and luckily for you, we started StockStory to help you find them. On that note, here is one resilient software stock at the top of our wish list and two we’re steering clear of.

Two Software Stocks to Sell:

Asana (ASAN)

Market Cap: $1.49 billion

Born from the founders' frustration with the inefficiencies of email-based collaboration at Facebook, Asana (NYSE:ASAN) provides a work management platform that helps organizations track projects, set goals, and manage workflows in a centralized digital workspace.

Why Should You Dump ASAN?

1. Offerings struggled to generate meaningful interest as its average billings growth of 9.4% over the last year did not impress
2. Net revenue retention rate of 95.7% shows it has a tough time retaining customers
3. Software platform has intricate integration requirements for its enterprise clients, triggering long sales cycles that limit new customer additions

Asana’s stock price of $6.35 implies a valuation ratio of 1.8x forward price-to-sales. Read our free research report to see why you should think twice about including ASAN in your portfolio.

nCino (NCNO)

Market Cap: $1.65 billion

Born from the internal technology needs of a community bank in 2011, nCino (NASDAQ:NCNO) provides cloud-based software that helps financial institutions streamline client onboarding, loan origination, and account opening processes.

Why Do We Think NCNO Will Underperform?

1. Offerings struggled to generate meaningful interest as its average billings growth of 14.6% over the last year did not impress
2. Estimated sales growth of 6.1% for the next 12 months implies demand will slow from its two-year trend
3. Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.3%

At $14.61 per share, nCino trades at 2.9x forward price-to-sales. Check out our free in-depth research report to learn more about why NCNO doesn’t pass our bar.

One Software Stock to Buy:

Samsara (IOT)

Market Cap: $18.64 billion

From sensors on vehicles to AI-powered cameras that help prevent accidents, Samsara (NYSE:IOT) is a cloud-based Internet of Things platform that helps businesses improve the safety, efficiency, and sustainability of their physical operations.

Why Will IOT Beat the Market?

1. ARR growth averaged 29.8% over the last year, showing customers are willing to take multi-year bets on its software
2. Forecasted revenue growth of 21.8% for the next 12 months indicates its momentum over the last two years is sustainable
3. Software platform has product-market fit given the rapid recovery of its customer acquisition costs

Samsara is trading at $32.44 per share, or 9.9x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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