Veeva Systems is a Top Stock for 2022 Veeva Systems (VEEV) is a cloud computing and enterprise software company for the healthcare, pharmaceutical, and life sciences industries. It provides software solutions for the unique needs of companies in...
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Veeva Systems (VEEV) is a cloud computing and enterprise software company for the healthcare, pharmaceutical, and life sciences industries. It provides software solutions for the unique needs of companies in these industries, from meeting regulatory standards to conducting clinical trials to managing operations. Read more to find out why it's setting up to be a top stock for 2022.
Veeva Systems (VEEV) is a cloud computing and enterprise software company for the healthcare, pharmaceutical, and life sciences industries. It provides software solutions for the unique needs of companies in these industries, from meeting regulatory standards to conducting clinical trials to managing operations.
It's one of my top picks for 2022 because the company is showing remarkable earnings growth while giving investors an attractive entry point with its recent 20% pullback over the last couple of months. VEEV's management team has also demonstrated the ability to expand margins, increase monetization per user, and continually innovate by adding new features and products.
Read on to find out why VEEV is one of the top growth stocks in the market and should outperform in 2022...
Attractive Entry Point
VEEV has been a major outperformer over the last few years. Since February 2016, the stock is up 1,260%. Over this period, the stock has tested its 20-month moving average about 3 times, and each instance resulted in over a 50% gain in the next 12 months.
Currently, VEEV is retesting this level. VEEV has been range-bound since August of last year. However, over the last six quarters, the company has increased revenue by 35% and EPS by 28%, while margins have slightly expanded as well.
Intersection of 2 Booming Trends
VEEV is also positioned at the intersection of two booming trends - healthcare and cloud computing - which show no signs of exhaustion in terms of growth. Not surprisingly, these sectors have birthed some of the biggest stock market winners in recent history.
The healthcare sector's growth is fueled by demographics due to an aging population in developed countries all over the world, increased government spending, and the constant stream of innovations that lead to new treatments. Healthcare spending as a share of GDP has risen to 18% in 2020, from under 12% in 1990.
Cloud computing is forecast to grow at a 19% rate over the next few years with the industry reaching a size of $1.2 trillion. Over 80% of the companies in the S&P 500 have some sort of job listing related to cloud computing. In order to stay competitive, companies have no choice but to invest in cloud computing systems. Many of these systems were integral to keeping corporations running during the pandemic and enabling people to work remotely.
Strong Leverage
VEEV also has favorable economics as gross margins are relatively high in addition to revenue retention rates that are typically above 100%. This means that companies are spending more money on the platform on a quarterly basis.
Further, VEEV has a track record of being able to introduce new products and features that lead to increased monetization through acquisitions or internal development which bodes well for continued EPS growth and margin expansion.
Wide and Deep Moat
Another attractive feature of VEEV is that the company has a wide and deep moat. For one, healthcare companies are unlikely to switch IT systems given the cost and inconvenience.
Second, these markets aren't easy to penetrate given that corporate managers at healthcare companies are unlikely to rely on unproven technology, especially as these companies deal with sensitive and sophisticated matters.
POWR Ratings
Thus, it's not surprising that the stock is rated a B by the POWR Ratings which equates to a Buy rating. Given that VEEV is forecast to grow EPS at a 15% rate over the next 5 years, it's not surprising that the stock has a B for Growth. Click here to see more of VEEV's POWR Ratings.
VEEV has all the characteristics of a big-time, stock market winner given that healthcare and cloud computing spending are poised to expand at healthy rates over the next decade. The stock has continued to grow earnings and revenue at an above rate, while the stock price has remained flat, making it more attractive on a valuation basis. Thus, investors should consider taking advantage of the stock's recent 20% decline.
Discover Today's Best Growth Stocks
This article was written by Jaimini Desai, Chief Growth Strategist for StockNews.com. Jaimini has been dialed into the hottest trends in investing:
- Electric Vehicles
- 5G
- Internet of Things
- Cloud Computing
- Genomics
- And Much More
If you would like to see more of his best growth stock ideas, then click the link below.
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VEEV shares were trading at $252.07 per share on Thursday morning, down $20.05 (-7.37%). Year-to-date, VEEV has declined -7.41%, versus a 22.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini's background, along with links to his most recent articles.
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