As the year is winding down, it’s a time when many investors scout for the next big investment opportunities that can fetch them market-beating returns. An analyst at JPMorgan delved into the potential effect of a rising interest rate environment and inflation on the software sector, and named three software picks for 2022 that are poised for accelerated growth. Higher Rates Could Compress Valuation Since 2019, interest rates have been more impactful on software valuations, as prices have hit all-time highs, analyst Sterling Auty said. Fed rate hikes and any corresponding rise in the 10-year treasury could have negative impacts on software returns in 2022, he added. Growth Key for Software Valuation The number one determinant of software valuation is growth, especially in the current market, Auty said. Questions remain over whether growth rates can be sustained at a tolerable level to keep valuations propped up, he added. This is evident from the …
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