Growth stocks aren't for every investor, but companies with strong balance sheets and clear paths to growth can deliver winning returns through the years. As with any other stock, you need to make sure there is a clear value proposition to the business you are buying, that it is on solid financial footing, and that it has the ability to correct potential weaknesses.
You also should be sure that any stock you buy reflects a business you understand and fundamentally feel is a wise addition to your portfolio based on your risk tolerance level and overall financial objectives. On that note, if you have cash to invest in the stock market right now, here are two top growth stocks to consider.
1. Veeva Systems
Veeva Systems(NYSE: VEEV) provides cloud solutions for life sciences companies. Its clients include some of the largest pharmaceutical and healthcare companies in the world, such as Merck, Johnson & Johnson, Novo Nordisk, and Eli Lilly. In recent years, it has also grown the cohort of consumer goods companies utilizing its unique cloud solutions, with customers including Colgate-Palmolive, Unilever, and Mattel.
Veeva specializes in enabling clients to maximize the efficiency of their operations and ensure a seamless journey from research and development to commercialization of core products. Its cloud computing solutions manage clinical, regulatory, and quality control while enabling users to collaborate and work with stakeholders. Its cloud offerings do everything from helping life sciences clients design clinical trials to aggregating vital content to streamlining patient registration to publishing regulatory submissions.
Most of Veeva Systems' revenue comes from subscription services for its cloud offerings. It also provides professional services such as data services, training, and consulting solutions.
In its fiscal 2025's first quarter, which ended April 30, the company reported total revenue of $650.3 million, a 24% year-over-year increase. Of that amount, $534 million was attributable to subscription services, and that revenue was up 29% from the year-ago period. Veeva also reported net income of $161.7 million, a 23% from the prior-year period.
Over its past four quarters, the business brought in operating cash flow of $1.2 billion, with about $1.1 billion in levered free cash flow. This is an asset-light business with a strong competitive advantage in its industry because of its focus on healthcare and consumer goods companies.
Its concentration in those niches, particularly healthcare, can provide it with significant resilience to macroeconomic headwinds. While healthcare businesses are not impervious to macro challenges, they tend to be far less vulnerable to them because of the essential nature of the products and services they provide.
Veeva looks like an interesting choice to consider for investors who want to capitalize on the growth story of a profitable, cash-rich cloud company.
2. Bill Holdings
Bill Holdings(NYSE: BILL) provides payroll management software services for close to half a million small to mid-sized businesses. Its platform leverages artificial intelligence to help customers ensure they meet their financial obligations to suppliers and clients.
Bill's platform enables seamless invoice creation, approvals, payment, accounting systems, and employee expensing. It also integrates with various banks, software solutions, and payment processors so its clients can easily manage payment requirements and digital workflows. And following its 2021 acquisition of expense management and business budgeting software company Divvy, it can now help clients construct budgets and manage smart corporate cards.
The core drivers of Bill's revenue are subscription fees and transaction fees. Its customers pay monthly or annual subscriptions to use its various software solutions. Transaction revenue comes from fees on such things as real-time payments, card payments, and check payments, interest on funds held for customers, and invoice creation. The company also generates significant recurring revenue from repeat transactions.
In its fiscal 2024's third quarter, which ended March 31, revenue rose 19% year over year to $323 million. Of that total, about $281 million came from subscriptions and transactions, while float revenue (interest on funds held for its customers) totaled about $42 million. Transaction fees accounted for $216 million, up 25% from a year prior. Bill is newly profitable and brought in net income of $32 million in the period.
At last count, the company had a net dollar retention rate of 111%. That metric tells you how much money a business is earning from its established customers, and can be a useful measure of customer retention. Meanwhile, Bill has estimated that its addressable market is in the ballpark of $30 billion, and it has only captured a small fraction of that -- its fiscal 2023 was the first year its annual revenues exceeded $1 billion.
Investors with the risk appetite to invest in a growth-oriented cloud company that is still working toward consistent profitability but has broadly sold financials, a resilient recurring revenue model, and strong customer loyalty may find Bill Holdings an appealing place to park some cash.
Should you invest $1,000 in Veeva Systems right now?
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Rachel Warren has positions in Johnson & Johnson. The Motley Fool has positions in and recommends Bill Holdings, Merck, and Veeva Systems. The Motley Fool recommends Johnson & Johnson, Novo Nordisk, and Unilever Plc. The Motley Fool has a disclosure policy.
