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.

Click the button below to learn more about A+ Investor and subscribe today.

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 Friday, March 29, 2024. 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.

Digital Turbine Inc’s Value Grade

Value Grade:

Digital Turbine, Inc. is a provider of independent mobile growth platform that levels up the landscape for advertisers, publishers, carriers, and device original equipment manufacturers (OEMs). The Company offers end-to-end products and solutions leveraging technology to all participants in the mobile application ecosystem, enabling brand discovery and advertising, user acquisition and engagement, and operational efficiency for advertisers. Its segments include On Device Solutions (ODS) and App Growth Platform (AGP). Its ODS segment consists of products and services that simplify the discovery and delivery of mobile applications and content media for device end-users. Its AGP segment consists of Advertising Solutions and Ad Monetization Solutions. Its Advertising Solutions serve two key segments: App Developers, and Brands and Agencies, which enables them to execute targeted mobile campaigns on the Company?s direct application inventory.

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.

Digital Turbine Inc has a Value Score of 69, which is considered to be undervalued.

When you look at Digital Turbine Inc’s price-to-sales ratio at 0.46 compared to the industry median at 4.08, this company has a lower price relative to revenue compared to its peers. This could make Digital Turbine Inc’s stock more attractive for value investors.

Now, let’s assess Digital Turbine Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 15.6, when compared to the industry median of 24.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. Digital Turbine Inc’s shareholder yield is lower than its industry median ratio of (2.22%). 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. Digital Turbine Inc’s price-to-book ratio is lower than its industry median ratio of 3.56. This could make Digital Turbine Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Digital Turbine Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Digital Turbine Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 32.14. This could make Digital Turbine Inc more attractive because the lower P/FCF ratio indicates that Digital Turbine Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Cyber Apps World Inc’s Value Grade

Value Grade:

Cyber Apps World Inc. is focused on the development of mobile applications. The Company allows users around the world to save money on products and services from member merchants and suppliers instantly with mobile coupons, using their desktops and/or mobile devices, including smartphones. The Company is developing a delivery computer application known as Friendly and Fast. The application is being designed to allow users to order food, groceries, and other courier services. Friendly and Fast's is focused on delivering goods. Friendly and Fast targets both individual and corporate customer segments.

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.

Cyber Apps World Inc has a Value Score of 89, which is considered to be undervalued.

Cyber Apps World Inc’s price-earnings ratio is 1.2 compared to the industry median at 51.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Cyber Apps World Inc more attractive for value investors.

Cyber Apps World Inc’s price-to-book ratio is lower than its peers. This could make Cyber Apps World Inc more attractive for value investors when compared to the industry median at 3.56.

You can read more about Cyber Apps World 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.

Logiq Inc’s Value Grade

Value Grade:

Logiq, Inc. is a provider of e-commerce and digital customer acquisition solutions. The Company provides a data-driven, end-to-end marketing solution. The Company operates through two segments: AppLogiq and DataLogiq. The Company offers solutions that help small-to-medium-sized businesses (SMBs), agencies, and enterprises to provide access to and reduce transaction friction in e-commerce for their clients. Its data-driven, artificial intelligence (AI)-powered solutions allow brands and agencies to advertise across digital and connected TV publishers. Its solutions are provided through the DataLogiq business, a digital marketing analytics business unit that offers data management, audience targeting and other digital marketing services that improve SMBs discovery and branding within the e-commerce landscape. The Company, through its DataLogiq platform, offers online marketing solutions on a performance marketing and self-service, software-as-a-service (SaaS) basis.

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.

Logiq Inc has a Value Score of 76, which is considered to be undervalued.

Logiq Inc’s price-to-book ratio is higher than its peers. This could make Logiq Inc less attractive for value investors when compared to the industry median at 3.56.

You can read more about Logiq 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.

PLAYSTUDIOS Inc’s Value Grade

Value Grade:

PLAYSTUDIOS, Inc. is a publisher and developer of mobile games, including Tetris mobile app, Pop! Slots, myVEGAS Slots, myVEGAS Blackjack, my KONAMI Slots, myVEGAS Bingo, MGM Slots Live, Solitaire, Spider Solitaire and Sudoku. The Company combines games that resonate with players worldwide with its playAWARDS loyalty platform, which enables players to earn real-world rewards from a global collection of hospitality, entertainment and leisure brands. The Company's game portfolio includes a diverse range of titles, from social casino and card games to puzzle and adventure games. The Company's social casino games and its Tetris-branded mobile game incorporate loyalty points that are earned by players as they engage with its games. The Company's platform includes operating tools tailored to the needs of its game makers, customer service features for its support and player hosts, and a console for its rewards partners. Its playAWARDS loyalty platform provides a tiered loyalty program.

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.

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

PLAYSTUDIOS Inc’s price-to-book ratio is higher than its peers. This could make PLAYSTUDIOS Inc less attractive for value investors when compared to the industry median at 3.56.

You can read more about PLAYSTUDIOS 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.

Scienjoy Holding Corp’s Value Grade

Value Grade:

Scienjoy Holding Corp, formerly Wealthbridge Acquisition Ltd, is a Hong Kong-based company mainly engages in the provision of show live streaming video entertainment social platform. The Company mainly operates online live streaming websites and mobile applications under the brand name of Showself, Lehai, and Haixiu.

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.

Scienjoy Holding Corp has a Value Score of 85, which is considered to be undervalued.

Scienjoy Holding Corp’s price-to-book ratio is higher than its peers. This could make Scienjoy Holding Corp less attractive for value investors when compared to the industry median at 3.56.

You can read more about Scienjoy Holding Corp’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.

Viewbix Inc’s Value Grade

Value Grade:

Viewbix Inc, formerly Virtual Crypto Technologies Inc, is an Israel-based video analytics and technology company. The Company provides Vsense, which is a video marketing platform. Vsense allows companies to drive a return on investment (ROI) from their videos while providing insights into viewer engagement. The Company enables users to create video players. It also offers solutions that incorporate templates and editing capabilities enabling subscribers to customize their videos with calls to action across digital platforms.

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.

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

Viewbix Inc’s price-to-book ratio is higher than its peers. This could make Viewbix Inc less attractive for value investors when compared to the industry median at 3.56.

You can read more about Viewbix 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.

Zerofox Holdings Inc’s Value Grade

Value Grade:

ZeroFox Holdings, Inc. is a provider of software-as-a-service (SaaS)-based external cybersecurity solutions. The Company provides customers with a SaaS-based platform for external cybersecurity (platform) that protects organizations from threats outside the traditional corporate perimeter. Its platform combines advanced artificial intelligence (AI) analytics, digital risk and privacy protection, full-spectrum threat intelligence, and a portfolio of breach, incident and takedown response capabilities to expose and disrupt phishing and fraud campaigns, botnet exposures, credential theft, impersonations, data breaches, and physical threats that target brands, domains, people, and assets. Its platform provides key capabilities across four platform pillars: ZeroFox Protection, ZeroFox Intelligence, ZeroFox Disruption, and ZeroFox Response. Its platform is a cloud-native enterprise software-as-a-service application that offers solutions to address external cybersecurity threats and risks.

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.

Zerofox Holdings Inc has a Value Score of 61, which is considered to be undervalued.

Zerofox Holdings Inc’s price-to-book ratio is higher than its peers. This could make Zerofox Holdings Inc less attractive for value investors when compared to the industry median at 3.56.

You can read more about Zerofox Holdings 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.

• Digital Turbine Inc stock has a Value Grade of B.
• Cyber Apps World Inc stock has a Value Grade of A.
• Logiq Inc stock has a Value Grade of B.
• PLAYSTUDIOS Inc stock has a Value Grade of B.
• Scienjoy Holding Corp stock has a Value Grade of A.
• Viewbix Inc stock has a Value Grade of A.
• Zerofox Holdings Inc stock has a Value Grade of B.

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 Friday, March 29
• 4 Undervalued Software Stocks for Thursday, March 28
• Why Braze Inc’s (BRZE) Stock Is Down 12.42%
• Why Consensus Cloud Solutions Inc’s (CCSI) Stock Is Up 5.24%

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.