1 Magnificent Growth Stock to Buy for $1,000

The cloud computing industry has faced some headwinds in recent years. Demand for cloud-related services has been affected amid economic woes. Veeva Systems (VEEV -0.31%)a cloud specialist focused on the life sciences, did not escape this ordeal. The company’s shares have fallen 32% over the past three years.

Still, there’s a lot to admire about Veeva’s business. Its performance has improved and many opportunities remain ahead for the company. Here’s why investing $1,000 in this stock would be a great move.

VEEV data by YCharts

Veeva shares rise on solid earnings

Although the cloud industry is competitive, Veeva Systems’ strength is that its solutions are tailored to meet the unique needs of life science companies, which face a maze of strict regulations and capital-intensive investments in products that can take years to to be realized. on the market (if they do at all), among others.

Veeva Systems has become one of the leaders in this niche of the cloud market. The company makes much of its money through subscriptions from its customers, a list that includes some of the world’s largest pharmaceutical companies. Veeva’s revenue growth rate has slowed from 2021, when business was in high demand, but has rebounded since last year.

VEEV Revenue Data (Quarterly Yearly Growth) by YCharts

In its most recent period, the second quarter of fiscal 2025, which ended July 31, Veeva’s revenue rose about 15% year-over-year to $676.2 million. In particular, the company’s revenue from subscription services increased by 19% to $561.3 million.

Veeva Systems continues to be very profitable. The company’s gross margin was 74.8%, up from 71.4% a year ago. Its earnings per share were $1.04, up nearly 53% from the year-ago period. Veeva’s results were well received by the market, sending the share price higher following its earnings release.

A great buy and hold option

There’s good reason to believe that Veeva Systems still has plenty of upside, beyond the fact that the headwinds it’s faced in recent years won’t last forever. One reason is that the business benefits from switching costs.

Veeva customers use its services for critical day-to-day activities, such as drug manufacturers keeping track of data for clinical trials, for example. Think how difficult it would be to jump to a competing platform, the logistics of transferring data to another platform, and the risk of losing some valuable data.

For a company that has already invested tens of millions of dollars in the development of a drug, it does not make sense to take this risk. That’s why Veeva is likely to keep most of its customers. And, as the company notes, it performs well against its competitors. Says Paul Shawah, Vice President of Veeva Systems:

I think we win virtually every CRM (customer relationship management) deal. You certainly never know if you win it all, but it sure feels like we do. We know we’re not losing any deals to the competitors we’re competing against.

Veeva Systems serves a $2 trillion industry that is expanding at a compound annual growth rate (CAGR) of 6%. It estimates a total addressable market (TAM) of $20 billion, which exceeds its trailing 12-month (TTM) revenue of $2.6 billion.

If the company can grow its TTM revenue to a quarter — $5 billion — of TAM over the next six years, its TTM revenue will grow at a decent CAGR of 11.5% over that period. Can Veeva Systems pull it off?

Given the company’s competitive advantage in switching costs and its track record — in the past, it has set revenue targets that it typically hits ahead of schedule — the smart money is on Veeva Systems to hit that target and have good performances through the end of the decade and beyond.

The company’s shares are trading at $216 each, so $1,000 can get investors around four of them. It’s money well spent.