While there are a variety of options, we should focus on cloud stocks that have strong pricing power and have become integral to many companies’ operations.
Two of the cloud infrastructure sector’s superstars are Veeva Systems (VEEV) and ServiceNow (NOW). Below, we delve into each of these powerhouses to determine which cloud infrastructure stock belongs in your portfolio.
Based in Pleasanton, California, VEEV provides cloud software applications along with big data solutions for groups in the life sciences space. VEEV’s product portfolio includes content and information management, customer relationship management solutions, product data management, data services, and more.
VEEV’s CRM is the company’s primary value offering. This CRM runs on the popular Salesforce.com Software-as-a-Service (SaaS) platform. The two companies are officially doing business together until the halfway point of the current decade.
VEEV has a B POWR Rating. The stock has an A Quality component grade along with Bs in the Sentiment and Growth components. VEEV has a C Momentum component grade. You can find out how the stock grades out in the Value and Stability components of the POWR Ratings by clicking here.
VEEV is ranked 28th of 79 publicly traded companies in the Medical – Services sector. Click here to learn more about the stocks in this space.
VEEV is currently trading around $320. The stock’s 52-week high is $326.89. VEEV’s 52-week low is $232.53. VEEV has a forward P/E ratio of 92.04. This ratio indicates the stock is likely slightly overvalued. However, it is important to note VEEV has a low beta of 0.74 so the stock probably won’t significantly undulate should the market become volatile.
NOW’s cloud computing services make information processing and workflows that much easier for businesses through the use of automation. Digital workflows are automated to ramp up the efficiency of overarching IT operations. As an example, NOW’s NOW Platform empowers businesses to boost their productivity through a highly efficient system processes streamlining. NOW’s solutions are used by businesses and organizations spanning a wide array of industries and specialties including human resources, customer service, legal, security, IT and more.
NOW has a forward P/E ratio of 102.22. This is a high ratio, meaning there is an argument to be made that the stock is overvalued. NOW has a reasonable beta of 0.93 so the stock probably won’t soar or fall off a cliff should the market become rocky.
NOW has a C POWR Rating grade. The stock has Bs in the Quality, Sentiment and Growth components. NOW has Cs in the Momentum and Stability components. If you are curious as to how NOW fares in the Value component of the POWR Ratings, you can find out by clicking here.
NOW is ranked 17th of 59 stocks in the Software – Business category. Click here to learn more about the stocks in this space.
The top analysts insist NOW is underpriced, setting an average target price of nearly $607 for the stock. If NOW hits this price level, it will have popped by more than 8%. The highest target price for the stock is $695. The worst-case scenario is the analysts’ lowest target price of $466.80.
It is interesting to note NOW’s average analyst price target has increased more than $46 across the prior half-year. A total of 32 analysts have issued NOW recommendations. Exactly 11 of these analysts view the stock as a Strong Buy, 18 view it as a Buy and three view it as a Hold.
Which is the Better Buy?
VEEV is the better buy. VEEV has a superior POWR Rating grade of B. VEEV also has a POWR Rating component with an A grade. NOW does not have a single POWR Rating component graded as an A.
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VEEV shares rose $0.76 (+0.24%) in premarket trading Wednesday. Year-to-date, VEEV has gained 17.84%, versus a 17.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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