A leader to buy at a discount
Jamie Louko (Veeva Systems): Veeva Systems often gets overlooked because it isn’t a high-flying tech stock, but it might be worth looking at now that it is 34% off its all-time highs. The company is the dominant software provider for life sciences businesses, offering tools for every step of their business -- from clinical testing to regulatory compliance to drug marketing.
Veeva could fare quite well over the coming quarters, despite inflation and a potential recession. Its tools are mission-critical for many of its customers considering they simplify data collection, storage, and other back-end operations. If a recession were to hit, the chances of customers giving up Veeva products in favor of manual processes is unlikely. In fact, the company recently signed one of its largest deals ever with a top 20 pharmaceutical customer, despite inflation and recession worries.
In the company’s first fiscal quarter -- which ended April 30, 2022 -- Veeva only grew its revenue by 16% year over year to $505 million. What it lacks in growth, however, it makes up for in profitability. Over the trailing 12 months, Veeva has generated over $767 million in free cash flow and $412 million in net income. Therefore, even if Veeva does get impacted by a recession, the company is so profitable that it can continue investing in its adoption, while rivals might have to cut back investment spending.
Veeva is unique in that no company offers the same wide-reaching product suite as it does. This puts the company in a unique position to capitalize on an opportunity that management believes is worth $13 billion. With shares cut by more than a third over the past year, this leader looks like a no-brainer investment that can provide high profitability and stability while growing substantially over the long haul.
