2 Best Software Stocks to Buy in 2023 and Beyond

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Written by Amy Legate-Wolfe at The Motley Fool Canada

There are a lot of tech stocks out there making a lot of lofty offers about the future. The problem is, there are far fewer who have delivered on those promises again and again. Today, I’m going to cover two software stocks that fall directly into this category.

The main point, however, is that you want software stocks that provide recurring revenue. Cash that will keep coming in year after year, and you simply cannot find it with the everyday tech stock.

Two companies I would consider buying today for 2023 and beyond are CGI (TSX:GIB. A) and Constellation Software (TSX:CSU).

CGI stock

CGI stock is definitely one of the software stocks I would consider these days. There are several reasons. First, let’s take a look at the announcements made over the last while. CGI stock hit 52-week highs, as the company announced several new partnerships or renewals lasting anywhere from five to 10 years. That a decade of recurring revenue coming in from companies as large as Microsoft.

The thing is, CGI stock has been doing this for years already. It’s not some exciting new company that won’t stand the test of time; it already has. The company was founded back in 1976 and, since then, has become a standout at finding software companies to purchase and turn around, taking in the revenue on the way.

Shares of CGI stock are up 30% in the last year alone and 392% in the last decade. It has decades on top of that of returns to consider as well. Furthermore, CGI stock is coming off several strong quarters with double-digit growth year over year. And there are still billions left in the backlog of projects. So, if you’re looking for more growth in the future, CGI stock is definitely one of the software stocks to consider.

Constellation Software

Constellation stock has been done exceptionally well. The problem here is the share price. There haven’t been stock splits, as we’ve seen with other companies, to bring the price down. Therefore, Constellation remains at about $2,635 per share as of writing.

Similar to CGI stock, however, the company purchases software companies to customize them for public and private markets. And it operates in practically every sector. If software can be added, Constellation stock is usually there. The difference is that Constellation stock really does focus on those acquisitions of smaller software companies. It’s worked for decades and is bound to continue with the company’s strong management team.

Shares are up 23% in the last year and an incredible 1.896% in the last decade. While it doesn’t have as much of a history as CGI stock, it’s been around since 1995 and has grown steadily since entering the market as well. While it’s hardly a cheap stock, the company has proven management knows exactly what it’s doing. So, I would certainly consider this stock among software stocks — especially if you can afford it on the TSX today.

The post 2 Best Software Stocks to Buy in 2023 and Beyond appeared first on The Motley Fool Canada.

Before you consider Constellation Software, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in April 2023… and Constellation Software wasn’t on the list.

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See the 5 Stocks * Returns as of 4/18/23

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends CGI and Constellation Software. The Motley Fool has a disclosure policy.


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