Veeva Systems are we under-focused?

Hey folks, I’ve been rather intrigued by VEEV lately, and I think it’s because we as a group are quite focused on DDOG, CRWD, FSLY and NET (closer to our own wheelhouses?).

https://publiccomps.com/tickers?items=B2B+SaaS

If you look at the bottom chart on that link. You can see VEEV is fourth from the right on “Efficiency” and hews pretty close to the line which, is an indicator of how/whether a company is ‘overvalued’ (compared to the group) in terms of EV/2020 Revenue or EV/2021 Revenue. (Although DDOG is a fly in the ointment that may be skewing the line entirely?)

Anyway, Veeva has 26% after tax margins (Net Income to shareholders, and same for Income from Continuing Ops [no special events skewing results]), 72% Gross Margins, and 30% YoY revenue growth. That seems very profitable, with pretty high growth.

-Another Rob

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Hey folks, I’ve been rather intrigued by VEEV lately, and I think it’s because we as a group are quite focused on DDOG, CRWD, FSLY and NET (closer to our own wheelhouses?).

rtichy

I have been invested in Veeva Systems for a few years now and I think it has out-performed many of the more popular names that everyone talks about. I have a SaaS heavy portfolio, so many of the Saas type companies that get talked about on this board or in the Fool paid services, I either currently have a investment in or have had a investment in sometime in the past. I think the only SaaS company in my portfolio that Veeva has not out-performed is Shopify. I have something like a 21 bagger in Shopify and Only a 5 bagger in Veeva Systems…there are not many stocks that one could have invested in during the last 5 years that could beat out Shopify, so I forgive Veeva Systems for only being a 5 bagger within the past 5 years or so.

Veeva probably has among the strongest moats out of any SaaS company that I have come across…the biggest problem with Veeva might be exactly how much more market share can Veeva expand into within the drug discovery & manufacturing industry. Veeva Systems already practically dominates software within the drug making industry.

Veeva does have some optionality, though, because Veeva’s solutions can be used in any regulated manufacturing industry like cosmetics, consumer goods and chemical companies. So, I think Veeva still has a lot of growth moving forward.

Starrob

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I think the only SaaS company in my portfolio that Veeva has not out-performed is Shopify. I have something like a 21 bagger in Shopify and Only a 5 bagger in Veeva Systems…there are not many stocks that one could have invested in during the last 5 years that could beat out Shopify, so I forgive Veeva Systems for only being a 5 bagger within the past 5 years or so.

Hi Starrob, Let’s see, as of Monday:

Okta was a little over a 7 bagger in just two and a half-years since I bought it at $29.95

Alteryx was a little over a 6 bagger in about the same two and a half-years since I bought it at $27.72

Zoom is “only” a 3.5 bagger in just over one year since I bought it at $77.63. That means it needs to rise just 44% total in the next four years to be a 5 bagger in five years, so we can probably count that as a sure thing (at least).

But what really counts is how your entire portfolio has done, not individual baggers. As I pointed out in my end of June summary, my portfolio results (posted every month so people can verify them) compounded to almost a 9-bagger on the entire portfolio in the past three and a half years. That’s why individual stock baggers are irrelevant. You can ride your Shopify from a 20 bagger to a 25 bagger in a year (and be even prouder of it), but that would only be a 25% gain. If you could put the money into a company that would only give you a 2 bagger in the same time, that would be a 100% gain, and would be four times as much gain for your money (although less to brag about).

Best,

Saul

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Personally I would guess that it’s much more likely that Zoom is down 44% than up 44% 4 years from now but maybe I’m an idiot. And fortunately I am not short the stock so in the even I am wrong I lose nothing!

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But what really counts is how your entire portfolio has done, not individual baggers. As I pointed out in my end of June summary, my portfolio results (posted every month so people can verify them) compounded to almost a 9-bagger on the entire portfolio in the past three and a half years. That’s why individual stock baggers are irrelevant. You can ride your Shopify from a 20 bagger to a 25 bagger in a year (and be even prouder of it), but that would only be a 25% gain. If you could put the money into a company that would only give you a 2 bagger in the same time, that would be a 100% gain, and would be four times as much gain for your money (although less to brag about).

Saul

Which is your own investing philosophy. I am not going to get into a long discussion of which investing philosophy is “best” except to say the “best” investing philosophy is one that fits a person’s time management, ability to withstand risk and is not all just about raw returns.

Why I like Veeva is because Veeva is one of the better performing SaaS companies over the past 5 years and Veeva has a higher safety level than most SaaS companies. Veeva has a powerful moat…one does not have to watch Veeva Systems like a hawk. The company simply performs.

Zoom Video is among the latest “hot” stocks and to be honest, I don’t know which way Zoom Video will ultimately go. Zoom Video has tons of upside but also tons of risks. Zoom Video has to be watched like a hawk…Veeva Systems, however, will likely double or triple or more (depending on it’s ultimate optionality) over the next 5 years BUT a investor probably will not have to watch Veeva Systems like a hawk.

Everyone’s investing philosophy is tied to their personal goals, the amount of time a person can dedicate to researching companies, the amount of risk a person is willing to take. a person’s portfolio management skills and a person’s aptitude in spotting the companies that eventually work out.

Some people prefer letting money compound in the same company. Some people prefer trading stocks over short period of time and then there is everything in between but everyone has to do what makes them comfortable.

In my opinion, I prefer to ride Shopify to over a 20 bagger rather than constantly spending my time looking for the next hottest thing. It takes time in researching the latest hot stock to become comfortable enough investing in “the latest & greatest” rather than simply letting the money sit in a company that one already knows a great deal about. I don’t have to spend a great deal of time researching Shopify like I would the next hot IPO looking for ingredients in that stock that will allow it to double or triple quickly, only to move on to the next hot thing a few months to three years later.

Just to get away from investing philosophy…the best potential company that I see over the next 5 years is Fastly. Fastly has tons of optionality…Fastly can evolve to far more than just a CDN. In fact, in five to ten years, I think Fastly could develop a few ancillary businesses that might become quite large. Fastly is a company I plan to sit in for the next 5 years or so.

STarrob

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Zoom Video has to be watched like a hawk…Fastly is a company I plan to sit in for the next 5 years or so.

Fastly needs to be watched more frequently/closely than Zoom. Zoom’s a proven winner and front-runner in many ways, including moats like name recognition, lack of usability friction, monthly or yearly subscriptions, etc. Fastly currently operates in the highly competitive CDN space, and the jury hasn’t even been convened on its edge computing product.

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Fastly needs to be watched more frequently/closely than Zoom. Zoom’s a proven winner and front-runner in many ways, including moats like name recognition, lack of usability friction, monthly or yearly subscriptions, etc. Fastly currently operates in the highly competitive CDN space, and the jury hasn’t even been convened on its edge computing product.

Smorgasbord1

Simply my opinion but Fastly and Zoom are both high risk-high reward companies.

Zoom Video might have less risk than Fastly but Fastly probably has more upside if Fastly does develop a few ancillary businesses off of Compute@Edge. Fastly has great optionality, in my opinion

Like everything else in investing, it is each individual investors risk vs reward guesstimation that will determine which stocks one will invest in. I am invested in both Zoom Video and Fastly (stocks I watch closely) as well as Shopify, Veeva Systems and Okta…(Stocks I don’t watch as closely). Then I own some others that haven’t been mentioned in this thread like Livongo, The Trade Desk and Crowdstrike…Like I said earlier, my portfolio is SaaS heavy but my individual positions are not as high as some other people on these boards.

I also do mix in companies that others might consider “boring” but are great wealth compounders over time like Markel and Brookfield Asset Management.

Starrob

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Simply my opinion but Fastly and Zoom are both high risk-high reward companies.

You said you didn’t like Zoom because it needing constant watching, while you said Fastly was a probably hold for 5 years for you.

Apparently, you think differently now that I pointed that out.

I also do mix in companies that others might consider “boring” but are great wealth compounders over time like Markel and Brookfield Asset Management.

Those aren’t just boring, they’re not even close to being “great wealth compounders.” MKL is up 14.11% over the last 5 years, compared to the S&P 500 at 54.62%. BAM isn’t much better at up only 47.23% over the last 5 years.

That puts MKL’s CAGR at 1.11% and BAM’s CAGR at 5%. Not just “yawn,” but very disappointing since they didn’t even beat the S&P 500.

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