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3 Software Growth Stocks Making a Comeback

These stocks are making a big comeback after a correction or consolidation period and are certainly worth watching going forward. Let's take a look at...

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This story originally appeared on MarketBeat

If you are primarily a growth investor, the chances are good that you haven't had the best year in the markets thus far. Many of the high-growth names that were huge winners in 2021 have faced serious selling pressure amidst valuation and inflation concerns. With that said, we are now seeing some of these names bounce back and get closer to making new highs. The true leaders in the software space are being established with every passing day, and it might pay off for investors to take notice.

Rapidly growing software stocks can be tricky to assess since most of the time they are unprofitable and are priced based on their future prospects. With that said, several software names producing groundbreaking technology are clearly favorites among institutional and retail investors at this time. These stocks are making a big comeback after a correction or consolidation period and are certainly worth watching going forward. Let's take a look at 3 software growth stocks making a comeback below.

Cloudflare Inc (NYSE:NET)

If you are a fan of legendary trader Jesse Livermore and his strategies, you might be familiar with his "Century Mark Rule". This rule states that "when a stock crossed $100 or $200 or $300 for the first time the price does not stop there but goes a good deal higher so that if you buy it as soon as it crosses the line it is almost certain to show you a profit." That's a big reason why Cloudflare should be on your radar, as the stock broke the crucial $100 per share mark earlier this week. It's a web infrastructure and web security company that is clearly in favor at the moment.

Cloudflare's platform helps businesses to increase the security of their websites and services, which is huge in today's increasingly connected world. The company powers internet requests for ~17% of the Fortune 1,000 and has been steadily growing its user base over the last few years. Most recently, the company reported Q1 revenue of $138.1 million, up 51% year-over-year, and record dollar-based net retention of 123%. The future seems bright for this software stock, and the stock is showing notable strength in a mixed tape.

Atlassian Corporation (NASDAQ:TEAM)

Another software growth stock that is coming back strong after a bout of weakness is Atlassian Corporation, a company that offers a range of team collaboration products. The company is a leader in "meta-software" which is software that helps to build additional software that can improve areas of an enterprise. The digital transformation trend is certainly benefitting Atlassian, and the fact that its products help teams to work more efficiently and effectively means that its software is marketable to essentially any business.

Atlassian is disrupting existing markets, particularly legacy software providers, and is poised for strong growth for years to come. The company reported strong Q3 earnings back in April that included quarterly revenue of $569 million, up 38% year-over-year, and net income of $150.7 million. It's also worth noting that Atlassian saves a ton of money on marketing by employing a web-based sales model, which in turn leads to better margins. The stock is breaking out to new all-time highs and is certainly worth a look for tech-oriented investors interested in one of the top growth stocks in software.

Shopify (NYSE:SHOP)

I wrote about Shopify back in April after the company reported stellar Q1 earnings, including revenue of $988.6 million, up 110% year-over-year, and Gross Merchandise Volume of $37.3 billion, up 114% year-over-year. The stock curiously took a heavy dip following the initial earnings reaction but has woken up in a big way over the last week. It seems like it's only a matter of time before this innovative e-commerce software company jumps out to new all-time highs, and it's definitely worth a look if you are interested in software growth stocks.

Shopify is so compelling as it's a company that is revolutionizing the e-commerce ecosystem. The company's platform allows entrepreneurs and businesses to build out beautiful and organized online stores without any prior experience in web design. The company makes e-commerce simple and affordable and enables entrepreneurship, which is something that any investor can get behind. While the stock has rallied over 17% during the past week, investors might want to consider adding shares on the next pullback or period of consolidation, as new highs are a stone's throw away.

Depositphotos.com contributor/Depositphotos.com via MarketBeat

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