12 Software Stocks Just Flashed Green – Here’s Our Favorite

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In This Digest: 

• Left-for-dead software stocks are roaring back 

• A new energy theme is lighting up our screens 

• Why June’s SpaceX IPO will be a “supernova” event for the entire space sector 

Software stocks were supposed to be dead money… 

You know the story. 

If ChatGPT or Claude can spin up a working app for a few hundred bucks, why would a business pay Salesforce (CRM) or Adobe (ADBE) hundreds of thousands a year for the same thing? 

And some of the world’s biggest software stocks have been pummeled on these AI disruption fears. Many are down 30%, 50%, even 70% from their highs. 

The software stock bears may be proven right. Or maybe they’ll be wrong, and these companies will prove more resilient than anticipated. 

Here at TradeSmith, we don’t twist ourselves into a pretzel trying to find the right answer. We let the data do the talking. And right now, the data says something interesting is happening behind all that doom and gloom. 

Every morning, I run a screen across the market for stocks that meet two simple conditions: 

• A high Fundamental Quantum Score. This means strong earnings growth, strong revenue growth, expanding profit margins, and a healthy balance sheet. 

• A fresh one-month price high. A simple way to catch quality stocks just as they start breaking out. 

The breakout list usually runs 30 to 60 names. This morning, 96 stocks made the list. That’s a big jump in bullish momentum. 

And 12 of those new names came from the beaten-down and hated software sector. 

1. ServiceNow (NOW) — Cloud platform that automates IT and business workflows for big companies 

2. DocuSign (DOCU) — The e-signature company that turned signing contracts into a tap on your phone 

3. Paylocity (PCTY) — Cloud-based payroll and HR software for mid-sized businesses 

4. Monday.com (MNDY) — Project and team management software used by hundreds of thousands of customers worldwide 

5. Paycom (PAYC) — Payroll and HR software that lets employees manage their own paychecks 

6. Paychex (PAYX) — Outsourced payroll and HR for small businesses 

7. ADP (ADP) — The largest payroll processor in the U.S. — pays roughly one in six American workers 

8. Fair Isaac (FICO) — The company behind the FICO credit score that lenders use to size up borrowers 

9. GoDaddy (GDDY) — Domain names and websites for millions of small businesses 

10. Box (BOX) — Secure cloud file storage for big companies 

11. F5 (FFIV) — Software that keeps corporate networks fast and protected from cyberattacks 

12. LiveRamp (RAMP) — Connects marketing data across companies without exposing customer identities 

These are stocks that spent most of the past year being left for dead. Nine of the 12 are still down between 29% and 73% from their highs a year ago. 

But all 12 just hit a one-month high.  

To repeat: The “software is dead” story may turn out to be right over the long run. But over the next few months, these names look like great candidates for bullish short-term trades. 

One software rebound stock stands out from the pack… 

Paylocity isn’t the best-known stock on our list. It isn’t the most beaten down, either. But it has the highest Fundamental Quantum Score of all 12. And that makes it a great stock to focus on if you want to play the bounce we’re seeing in the sector. 

A quick refresher on the Quantum Score. It grades every stock we cover from 0 to 100, based on two separate scores:  

1. A Fundamental Score that captures earnings growth, revenue growth, and margin strength.  

2. A Technical Score that captures price momentum and unusually large buying from big institutions — think hedge funds, pension funds, and mutual funds. 

A score above 75 is a buy. A score above 90 is rare air. PCTY’s Fundamental Score sits at 95.7 today. 

This breakout stock is also in a seasonally bullish window…  

Take a look at how the stock has tended to trade through each calendar year according to our Seasonality software. 

PCTY has gone up between May 20 and Sept. 3 in 10 of the last 12 years. That’s an 83% hit rate for an average gain of 22.4%. 

Add Paylocity to your watchlist. When a dozen stocks in one sector light up our screen on the same day, the system is telling us a bigger move is underway.  

When these stocks bounce, they bounce hard. LiveRamp is up 31% over the past month. F5 is up 22%. And Monday.com is up 20% — off a 73% drawdown. 

If the seasonal pattern holds, Paylocity could be one of the strongest performers in the group between now and Labor Day. 

Offshore drillers are flashing green, too… 

Higher oil prices have been good for energy stocks.  

But our screen is picking up a more specific signal underneath the rally: a fresh cluster of bullish breakouts in the offshore drilling and oilfield services corner of the sector. 

Valaris (VAL) is one of the world’s largest offshore drilling contractors. Yesterday, it flashed green on our screen. Today, six more similar stocks joined it: 

• Kodiak Gas Services (KGS) — Natural gas compression services that keep gas flowing through pipelines 

• Innovex International (INVX) — Oilfield equipment used in drilling, completion, and production 

• Noble Corp plc (NE) — Offshore drilling contractor running one of the world’s biggest deepwater rig fleets 

• Helix Energy Solutions (HLX) — Well intervention and decommissioning services for offshore platforms 

• NOV Inc. (NOV) — Equipment and components used on rigs around the world 

• Weatherford International (WFRD) — Drilling and production services for onshore and offshore wells 

Four of these stocks are up more than 100% over the past year. And our Predictive Alpha AI model is especially bullish on the one that flashed first: Valaris. 

As regular readers will know, it works in a similar way to large-language AI models like ChatGPT and Claude. But instead of predicting the next word in a sentence, it predicts where a stock is likely to go next. 

We trained it on more than 100 billion data points from decades of market history. For any given stock, it produces a target price, the expected percentage move, and the date it expects that move to play out by. It also shows how accurate its past forecasts on that ticker have been. 

Here’s what it sees for Valaris right now. 

From the current price of $111.05, our model projects a move to $120.38 by June 5. That’s a 6.1% gain in roughly three weeks. 

And its track record on VAL is 77.3%. In other words, in roughly three out of four past forecasts on this stock, Valaris hit the projected price by the projected date. 

That makes Valaris a clean short-term setup. For broader exposure to the theme, the rest of the cluster I listed above is worth a closer look. 

If you’re a paid-up subscriber, pull these tickers up on the TradeSmith Finance platform and see which ones look strongest for a longer-term play. 

Finally, a word on the upcoming SpaceX “supernova”… 

Last week, I was in Washington, D.C., with our CEO Keith Kaplan… Andy and Landon Swan of our MegaTrends advisory… Lucas Downey, who runs our Signals by TradeSmith and Quantum Edge Pro services… and TradeSmith’s master options trader, Jeff Clark. 

Also on hand were analysts from our sister firms — Stansberry Research, Altimetry, Chaikin Analytics, and InvestorPlace. 

We were there to discuss our biggest money-making ideas for the year ahead. And one recurring theme among all the analysts was the new layer of infrastructure being built in space. 

To get everyone up to speed, we’re not just talking about celebrities doing space tourism. We’re talking about a working economy taking shape a few hundred miles above your head. 

The cost of putting a kilogram into low-Earth orbit has dropped from roughly $20,000 to $2,000, thanks to reusable rockets. That’s opened the door for thousands of new satellites — and a stack of new industries built on top of them: 

• Launch and propulsion — companies like SpaceX and Rocket Lab that get payloads to orbit 

• Communications networks — satellite-to-phone services like Starlink and AST SpaceMobile that beam internet to anywhere on the planet 

• Earth observation — fleets that photograph the entire globe every 24 hours, feeding everything from crop forecasts to military intelligence 

• Orbital AI — the data centers and chips on the ground that turn all those satellite signals into something useful 

The space economy is worth about $550 billion today. McKinsey estimates it will hit $1.8 trillion by 2035. 

And according to the Swans, Elon Musk’s SpaceX IPO on June 12 won’t just be the biggest IPO in history. It will be a supernova event for the entire space theme. As they put it: 

We’re talking about a multi-trillion-dollar buildout tied to AI systems, satellites, orbital manufacturing, missile defense, and lunar missions. And the crowd is only starting to connect the dots. 

If you’re a paid-up MegaTrends subscriber, this won’t be news. The Swans have already released two space-themed reports — one in October 2025 and another in February 2026. 

So far, the eight picks in the first report are up an average of 101.4%. And the three moonshot picks in their second report are up an average of 89.4%. 

And if Andy and Landon’s “SpaceX supernova” thesis plays out, the gains so far are only the start. As they put it in a recent update to their subscribers: 

The space economy is no longer some far-off sci-fi theme. The money is real. The contracts are real. And the companies building the infrastructure around this trend are starting to separate from the pack. 

We’ll have more on this emerging investing theme in coming issues. For now, a simple way to get broad exposure is through the ARK Space & Defense Innovation ETF (ARKX). 

ARKX is an actively managed fund from Cathie Wood, the ARK Invest founder known for her bullish calls on disruptive tech. It holds a mix of U.S. and foreign companies working in space exploration, orbital aerospace, and defense innovation. 

It won’t deliver the same upside as the targeted picks the Swans have given their subscribers. But it’s a one-click way to put yourself on the right side of one of the biggest themes our analysts see for the years ahead. 

To building wealth beyond measure, 

Michael Salvatore 

Editor, TradeSmith Daily