3 SaaS stocks that investors should consider buying are Workday, Inc. (NASDAQ:WDAY), Veeva Systems (NYSE:VEEV), and SAP SE (DE:SAPG) (SAP). These stocks all have rising earnings and margins which bode well for these companies' stock prices over the next year.Over the last 5 years, the technology sector has significantly outperformed the S&P 500. This is evident by the Technology Select Sector SPDR ETF’s (XLK) 232% gain, compared to the S&P 500’s 105% gain.
In the corporate world, technology has become integral to all types of operations, such as sales, marketing, supply chain management, customer service, manufacturing, etc. So, it’s not surprising that among the technology sector, SaaS (Software as a Service) stocks have been among the best performers. These stocks are also attractive to investors because they tend to have high margins, double-digit revenue growth, impressive rates of customer retention, and opportunities to help businesses solve problems or increase revenue with new products and features.
Further, once a company starts using a SaaS product, they are likely to keep using it for a long period of time as their employees become comfortable with it, their data is stored on it, and they want to avoid the costs and inconvenience of switching. In 2021, many SaaS stocks have underperformed following big gains in 2020, creating an opportunity in select names that continue to grow. 3 SaaS stocks that investors should consider buying are Workday, Inc. (WDAY), Veeva Systems (VEEV), and SAP SE (SAP).