Jamie Louko (Veeva Systems): Veeva Systems is perhaps one of the safest tech stocks on the market today. Veeva provides software and data storage tools for the life sciences space, and it is the far-and-away leader here.
The company has software tools ranging across an entire pharmaceutical company’s lifespan, from data management tools to operate clinical drug trials to customer relationship management tools to help sell those drugs. With over 1,200 customers, including some of the leading pharma companies on the market today, Veeva is the dominant player in the space. Considering no other player has an offering as extensive as Veeva, the company will likely continue to dominate the market.
This leadership has helped the company remain relatively resilient during 2022, both stock-wise and operationally. In terms of the company’s stock, shares have fallen just 18% over the past six months versus the Nasdaq Composite index’s drop of 24%.
Operationally, Veeva has continued to post stable results despite inflation and tightening business budgets. Veeva posted 16% and 17% year-over-year revenue growth in Q1 and Q2, respectively, and the company continued to gush cash. Over the trailing 12 months, Veeva generated more than $741 million in free cash flow and $394 million in net income, representing a margin of 37% and 20%, respectively.
With this immense cash flow, Veeva has invested in developing new products to further its stability and dominance, making it an increasingly safer tech stock to own for the long haul. While Veeva might not be the fastest-growing tech stock out there, its high switching costs and hard-to-replicate leadership could allow the company to post steady results over the long term. At 35 times free cash flow, Veeva’s valuation is near an all-time low since coming public in 2013. Therefore, investors can buy this safe stock close to its cheapest valuation in almost a decade.
