3 Growth Stocks to Watch for a Pullback Learn about three high-quality stocks that have strong growth potential and loyal customers, but also high valuations. Find out why you should wait for a better entry point to buy these stocks.
Veeva Systems: One of the 3 Growth Stocks That Leads the Cloud Market for Life Sciences
Veeva Systems (VEEV 5.33%) is a leading cloud software platform for the life sciences industry. Its products are used by more than 1,000 customers of all sizes in the pharmaceutical, biotechnology, diagnostics, and related sectors. The cloud platform enables a wide range of vital functions, such as sales, customer interactions, drug development, clinical trial management, and regulatory compliance.
Veeva Systems is one of the three growth stocks that has a strong competitive advantage and a loyal customer base. The company has been growing its revenue at a compound annual growth rate (CAGR) of 28% over the past five years, and it has a high gross margin of 72%. Veeva Systems also generates positive free cash flow and has no debt on its balance sheet.
ServiceNow: Another of the 3 Growth Stocks That Excel in IT Workflow Management
ServiceNow (now 1.70%) offers cloud-based IT workflow management software. It helps customers find and solve problems and track these processes throughout the organization.
The company’s platform is deeply integrated among enterprises; roughly 85% of the S&P 500 are customers, and it has roughly 40% market share. Like Veeva systems, ServiceNow provides a variety of vital functions that have high switching costs. This makes customers loyal, and the company has consistently grown customer relationships by enhancing its offerings.
ServiceNow is another of the three growth stocks that has a bright future ahead. The company is growing at roughly 25% annually, and it’s generating a lot of cash along the way. The company expects to generate more than $2.5 billion in free cash flow this year on $8.6 billion of revenue. ServiceNow has consistently beaten Wall Street’s estimates and its guidance.
CrowdStrike: The Last of the 3 Growth Stocks That Shine in Endpoint Cyber security
CrowdStrike (CRWD 0.88%) is an endpoint cybersecurity leader that’s among the best in its field. The company’s competitive advantage is hard to verify due to a highly competitive, fast-changing, and highly fragmented industry. However, CrowdStrike is steadily gaining market share while adding features to its platform. The company is also achieving consistently high revenue retention, showing strong customer satisfaction and a “sticky” product that’s hard for customers to abandon.
CrowdStrike is the last of the three growth stocks that has impressive performance and potential. The company posted 35% revenue growth last quarter. Perhaps more importantly, the company turned profitable while generating nearly $800 million of free cash flow for the full fiscal year. That’s a commendable performance in a tough economic situation, and it shows that company management can improve operational efficiency without compromising too much growth potential.
Why These 3 Growth Stocks Are Worth Waiting For
These three growth stocks have bright prospects but also hefty valuations. Wait for a better opportunity to buy.
Many investors may have overlooked some great stocks that have soared higher this year. The recent market surge has favored high-quality companies, pushing some valuations into risky territory. These 3 growth stocks are ready for long-term success, and investors should keep an eye on them if their valuations drop to a more attractive level.
The Bottom Line: Don’t Miss These 3 Growth Stock Opportunities
Should you invest $1,000 in Veeva Systems right now?
Before you buy stock in Veeva Systems, consider this:
The Motley Fool Stock Advisor analyst team just revealed what they think are the 10 best stocks for investors to buy now. and Veeva Systems was not one of them. The 10 stocks that made the list could deliver huge returns in the coming years.
Think about when Nvidia made this list on April 15, 2005. If you invested $1,000 at the time of our recommendation, you’d have $332,990!