Here are Credit Suisse's favorite software stock ideas for the next year

Key Points
  • Credit Suisse shares its best software stock ideas from the firm's research team.
  • The firm has a $110 12-month price target for Shopify shares, representing 14 percent upside from Friday's close.
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

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 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."

More In Pro News and Analysis

CNBC ProCannabis investor Tim Seymour on how to play Schumer's pot decriminalization bill
CNBC ProGoldman Sachs says these stocks will benefit from a "new normal" hybrid work future
CNBC ProHedge fund manager Dan Niles says he's buying Chinese stocks again after government crackdown