Here are Credit Suisse's favorite software stock ideas for the next year
Software stocks have crushed the market this year and a Wall Street analyst believes the industry's strong performance will continue. The sector has rallied 23 percent year to date versus the S & P 500 's 10 percent return, according to Credit Suisse's research. Cloud-oriented software stocks are up even more with a 30 percent gain in the same time frame. Here are three outperform-rated companies in the industry recommended by Credit Suisse analyst Michael Nemeroff in a note to clients Monday, along with the firm's current price targets. 1) Shopify (SHOP) Nemeroff has a $110 12-month price target on Shopify shares, representing 14 percent upside from Friday's close. "The SHOP juggernaut continues … SHOP's Q2 surprised positively on almost every metric, blowing away merchant additions (now greater than > 500K), which sets the stage for faster than expected growth in all areas of the business over the next few qtrs, at least, including breaking through the profitability barrier, which we view as one of the final frontiers for the Shopify juggernaut." 2) Paycom (PAYC) The analyst has a $78 12-month price target on Paycom shares, representing 12 percent upside from Friday's close. "PAYC posted its 13th consecutive beat and raise qtr. Revenue upside in the qtr stemmed from strong recurring revenue growth despite a tough comp. Additionally, the company achieved its highest sales week for new business signings in July, which has historically been a seasonally weak period. We believe this momentum validates mgmt's approach in opening new sales offices over time." 3) Callidus (CALD) Nemeroff has a $30 price target on Callidus shares, representing 20 percent upside from Friday's close. "CALD reported strong Q2 results. Specifically, SaaS revenue growth accelerated to +32%, as CALD continues to see traction penetrating new customers and its existing base, and as markets like EMEA, where CALD has recently increased investments, show signs of improvement."

An Apple iPad with the Shopify app is displayed at the entrance to the company's headquarters in Toronto, Ontario. Kevin Van Paassen | Bloomberg | Getty Images