In this article, we will take a look at some of the best penny stocks in the software space that offer attractive upside potential to investors.
On March 6, The Morningstar Analysis, authored by Eric Compton and Dan Romanoff, highlighted the future direction for the software industry. This included an assessment of areas where growth can be achieved as well as an understanding of where artificial intelligence fits into the picture, going forward.
The most important finding in the assessment is that software revenues are expected to grow at more than 11% annually until 2029, with growth reaching 12% in 2025. As described by Morningstar, four primary drivers underlie the aforementioned growth trends. These include increased demand for artificial intelligence due to the use of generative technology, huge increases in data requiring storage and organization, increased use of public clouds requiring a shift away from internal systems, and the acceleration of digital transformation brought about by the pandemic.
The most important point mentioned in the article is that switching costs create high levels of customer loyalty in the software industry, with the cost of attracting one new customer initially high, while the customer’s value triples after 10 years. Under such conditions, it becomes increasingly important to identify software companies with wide moats due to switching costs and network effects.
With that background, let’s explore our 8 Best Software Penny Stocks to Buy Now.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed software companies with share prices below $5 and market capitalizations above $200 million. Also, we only shortlisted stocks with at least 60% upside potential, according to analyst consensus as of the April 6 close. Finally, we selected 8 stocks with the highest upside and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
8. Rimini Street Inc. (NASDAQ:RMNI)
Rimini Street Inc. (NASDAQ:RMNI) is one of the 8 best software penny stocks to buy now.
As of the April 6 close, Rimini Street Inc. (NASDAQ:RMNI) had a strongly bullish consensus sentiment. The stock received coverage from 4 analysts, 3 of whom assigned Buy ratings and 1 gave a Hold call. With no Sell rating, the stock has a projected median 1-year price target of $5.58, which leads to an upside potential of more than 62% at the prevailing level.
On March 31, Rimini Street Inc. (NASDAQ:RMNI) established a multiyear partnership with South Korea’s top rental company, Lotte Rental. The company has been selected by Lotte to curtail its IT-related expense bill and achieve digital transformation by leveraging Rimini Support™ for SAP and Oracle software.
Lotte Rental acknowledges that with Rimini’s support, the company will not face gaps in its support needs anymore and will also help execute an efficient ERP strategy. Changgeun Park, Head of IT at Lotte Rental, stated:
“Ensuring that our foundational enterprise systems are secure, flexible and primed for innovation is essential to achieving our vision to lead the mobility industry. Our partnership with Rimini Street provides us with a level of savings and quality of service unmatched in the industry.”
Rimini Street Inc. (NASDAQ:RMNI) is a software support provider, covering Oracle and SAP enterprise solutions. The company delivers managed services, enterprise software services, Agentic AI, and other solutions. It also offers an array of other solutions, including Rimini Agentic UX, Rimini Support, Rimini Manage, and Rimini Protect.
