Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Software industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Software Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Software Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Software industry for Monday, December 04, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Software industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Beamr Imaging Ltd’s Value Grade

Value Grade:

Beamr Imaging Ltd is an Israel-based video technology and image science software company. Beamr Imaging Ltd provides video encoding, transcoding, and optimization software solutions that enable high quality, performance, and bitrate efficiency for live and Video on Demand (VOD) video services. Company's product portfolio includes Codec SDKs- software development kit, CABRA Library is a Content Adaptive BitRate rate control library that integrates with existing hardware and software video encoders to reduce bitrates. JPEGmini Photo Opitmizer- a patented photo recompression technology which reduces the size of photographs without affecting their perceptual quality. Beamr Imaging Ltd operates globally.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Beamr Imaging Ltd has a Value Score of 65, which is considered to be undervalued.

When you look at Beamr Imaging Ltd’s price-to-sales ratio at 4.23 compared to the industry median at 3.52, this company has a higher price relative to revenue compared to its peers. This could make Beamr Imaging Ltd’s stock less attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Beamr Imaging Ltd’s shareholder yield is higher than its industry median ratio of (2.57%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Beamr Imaging Ltd’s price-to-book ratio is lower than its industry median ratio of 3.24. This could make Beamr Imaging Ltd more attractive to investors looking for a new addition to their portfolio.

iCoreConnect Inc’s Value Grade

Value Grade:

iCoreConnect Inc. (iCoreConnect) is a cloud-based software and technology company. The Company is focused on increasing workflow productivity and practice profitability through its enterprise and healthcare workflow platform of applications and services. It is primarily engaged in providing solutions to solve the healthcare business problems. iCoreConnect touts a platform of over 16 software-as-a-service (SaaS) enterprise solutions and more than 100 agreements with state or regional healthcare associations across the country. It offers solutions for the dental, medical and business information technology (IT) sectors. Its solutions include iCoreRx, iCoreVerify, iCoreHuddle, iCoreExchange, iCoreCloud, iCoreIT and iCoreCodeGenuis. iCoreRx is an ePrescribing solution to improve efficiency, resource utilization, and patient safety. iCoreVerify platform offers automated insurance verification for dental practices. iCoreHuddle provides revenue-focused patient and practice analytics.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

iCoreConnect Inc has a Value Score of 90, which is considered to be undervalued.

iCoreConnect Inc’s price-to-book ratio is higher than its peers. This could make iCoreConnect Inc less attractive for value investors when compared to the industry median at 3.24.

You can read more about iCoreConnect Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Infobird Co Ltd’s Value Grade

Value Grade:

Infobird Co Ltd is a China-based holding company mainly engaged in providing software-as-a-service (SaaS) and innovative artificial intelligence (AI) powered products. The Company mainly uses self-developed cloud computing structure, AI and machine learning capabilities, patented Voice over Internet Protocol or VoIP application technologies, and no-code development platform, providing standard and customized customer relationship management cloud-based services, and business process outsourcing (BPO) services to its clients at all stages of the sales process. The Company also offers AI-powered cloud-based sales force management software including intelligent quality inspection and intelligent training software to help its clients monitor, benchmark and improve the performances of agents.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Infobird Co Ltd has a Value Score of 85, which is considered to be undervalued.

Infobird Co Ltd’s price-to-book ratio is higher than its peers. This could make Infobird Co Ltd less attractive for value investors when compared to the industry median at 3.24.

You can read more about Infobird Co Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

iSpecimen Inc’s Value Grade

Value Grade:

iSpecimen Inc. is a technology-driven company. The Company iSpecimen Marketplace platform is designed to transform the biospecimen procurement process to accelerate medical discovery. Its technology consolidates the biospecimen buying experience in a single, online marketplace that brings together healthcare providers who have biospecimens and researchers across industry, academia, and government institutions who need them. Its iSpecimen Marketplace platform has compiled de-identified healthcare data provided by its healthcare supply partners. The Company?s platform helps with administrative and reporting functions for researchers, suppliers, and its internal personnel, including user and compliance management. The iSpecimen Marketplace is composed of four functional areas: search, workflow, data, and administration and reporting. The Company serves biopharmaceutical companies, in vitro diagnostic (IVD) companies, and government/academic institutions.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

iSpecimen Inc has a Value Score of 81, which is considered to be undervalued.

iSpecimen Inc’s price-to-book ratio is higher than its peers. This could make iSpecimen Inc less attractive for value investors when compared to the industry median at 3.24.

You can read more about iSpecimen Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

MiX Telematics Ltd - ADR’s Value Grade

Value Grade:

MiX Telematics Limited is a provider of connected fleet and mobile asset solutions delivered as software-as-a-service (SaaS). Its segments include Africa, Europe, Americas, Middle East and Australasia, Brazil and Central Services Organization (CSO). It offers a range of solutions to address the needs of diverse customer segments. Its subscription-based offerings include MiX Fleet Manager, MiX Asset Manager, Matrix and Beam-e. MiX Fleet Manager is its premier commercial fleet management solution. Its fleet management systems provide a variety of complex data pertaining to driver behavior and the location, status and operational activity of vehicles and fleets. MiX Fleet Manager is an interactive, Web-based application providing secure access to this complex data. MiX Asset Manager includes a portfolio of asset tracking products, including third-party hardware products and products. Its Matrix suite of mobile asset management solutions is designed for entry-level fleets and consumers.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

MiX Telematics Ltd - ADR has a Value Score of 78, which is considered to be undervalued.

MiX Telematics Ltd - ADR’s price-earnings ratio is 21.0 compared to the industry median at 46.3. This means that it has a lower price relative to its earnings compared to its peers. This makes MiX Telematics Ltd - ADR more attractive for value investors.

MiX Telematics Ltd - ADR’s price-to-book ratio is higher than its peers. This could make MiX Telematics Ltd - ADR less attractive for value investors when compared to the industry median at 3.24.

You can read more about MiX Telematics Ltd - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Upland Software Inc’s Value Grade

Value Grade:

Upland Software, Inc. provides cloud-based software applications. The Company?s applications are useful in various business functions, including marketing, sales, contact center, knowledge management, project management, information technology, business operations, and human resources and legal. Its applications interact with consumers across multiple channels to acquire new customers, drive product and service utilization, and resolve issues. It offers applications that help organizations optimize their sales opportunity and account management processes, coordinate proposal and reference activities, collaborate on the creation and publication of digital content and gain increased control over key sales and marketing workflows, activities and budgets. Its applications offer customer self-service products and voice of the customer (VoC) technology. It provides direct access to knowledge and to customer sentiment. It also provides knowledge management applications.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Upland Software Inc has a Value Score of 69, which is considered to be undervalued.

Upland Software Inc’s price-to-book ratio is higher than its peers. This could make Upland Software Inc less attractive for value investors when compared to the industry median at 3.24.

You can read more about Upland Software Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Zedge Inc’s Value Grade

Value Grade:

Zedge, Inc. is engaged in building digital marketplaces and competitive games. The Company's products include Zedge Ringtones and Wallpapers, which is a freemium digital content marketplace offering mobile phone wallpapers, video wallpapers, ringtones and notification sounds; pAInt, a generative artificial intelligence (AI) wallpaper maker; GuruShots, a skill-based photo challenge game, and Emojipedia. It uses open-source software in connection with its services. The Zedge Ringtones and Wallpapers app is available both in Google Play and the App Store. Its GuruShots product offers a platform spanning iOS, Android, and the Web that provides an educational and structured way for amateur photographers to compete in a variety of contests. It has added non-fungible token (NFT) functionality to a limited number of Zedge Premium creators via NFTs Made Easy, and all NFT Made Easy transactions are made using Zedge Credits.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Zedge Inc has a Value Score of 89, which is considered to be undervalued.

Zedge Inc’s price-to-book ratio is higher than its peers. This could make Zedge Inc less attractive for value investors when compared to the industry median at 3.24.

You can read more about Zedge Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Software Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Software stocks as well as other industrys.

Choosing Which of the 7 Best Software Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Beamr Imaging Ltd stock has a Value Grade of B.
• iCoreConnect Inc stock has a Value Grade of A.
• Infobird Co Ltd stock has a Value Grade of A.
• iSpecimen Inc stock has a Value Grade of A.
• MiX Telematics Ltd - ADR stock has a Value Grade of B.
• Upland Software Inc stock has a Value Grade of B.
• Zedge Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the Software industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Software Stocks

Want to learn more about Software stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Software Stocks for Monday, December 04
• 5 Undervalued Software Stocks for Friday, December 01
• Why Alteryx Inc’s (AYX) Stock Is Up 4.57%
• Why Amplitude Inc’s (AMPL) Stock Is Up 5.63%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.