Goldman Sachs Bullish on These 2 Software Stocks for at Least 50% Upside Potential

We saw something of a rally in the markets last week, but was it just the famous ‘dead cat’ bounce? A look at the charts might suggest that. Since the beginning of April, we seen two short rallies in an otherwise bearish trend – but the second rally was shorter than the first, with a lower peak. Market watchers are starting to wonder if the cat is done bouncing.

So, how can investors ride out this hostile environment?

Goldman Sachs analyst Kash Rangan believes that software stocks, with currently depressed prices and high upside potentials can provide a measure of protection for investors seeking a defensive stance against the larger market downturn.

“While software is late-cycle and investors are rightly wary of relatively unchanged FY forecasts, we revert to our intrinsic analysis as a backstop to the divergence between these companies’ strong business models and current valuations. We maintain our view that profitable growth software can serve as a defensive asset class during challenging economic conditions,” Rangan explained.

Rangan follows up his discussion of ‘defensive’ software stocks with two such picks. As noted, these stocks feature beaten-down share prices but still have plenty of upside potential – in Rangan’s view, better than 50% for the year ahead. Do other analysts agree with Rangan? Let’s take a closer look.

GitLab (GTLB)

The first of these ‘Goldman software picks’ is GitLab, an innovator in DevOps platform development. The company offers business customers an open-source platform for devops work, one that promises to increase speed and efficiency as well as maximizing the end-product’s overall return. GitLab’s innovative insight was to allow users and collaborators to contribute to the planning, building, and deployment of the platform through the open-source model. GitLab offers this basic platform for free to customers, who can also subscribe for access to proprietary upgrades and add-ons.

In the 8 years that GitLab has been open for business, the company has seen its product expand to a wide audience. The firm has…


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