2 Digital Winners Report Thriving Results
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2 Digital Winners Report Thriving Results

 

Stocks are once again moving higher on good news. More positive investor sentiment could mean broadly higher stock prices in the near term.

This was on display last Friday as two digital winners — Salesforce.com, Inc. (NYSE: CRM) and Veeva Systems Inc. (NYSE: VEEV) — shot higher following better-than-expected financial reports.

To be fair, the reports from Salesforce and Veeva are indicative of the larger trend toward digital transformation. While Salesforce is quickly moving the enterprise world toward digitizing marketing, workflow and sales channels, Veeva is dominating digital record-keeping in the pharmaceutical sector.

On Thursday, Salesforce managers said that 2022 sales should reach almost $26 billion, up 22% year over year. And Veeva managers noted that first-quarter revenues increased to $433.6 million, up 29%.

But that’s not all that was impressive:

Salesforce reported $1.21 per share versus 88 cents as expected by analysts. Revenue came in at $5.96 billion versus the expected $5.89 billion.

Related Post: Digital Transformation of Industry and Finance Is Just Starting

Veeva earned 91 cents per share on $433.6 million in sales .

What’s especially noteworthy for VEEV is that it had record bookings for its Veeva Vault system. Veeva Vault is a cloud enterprise content management platform for life sciences companies.


Clearly, managers at these businesses have found efficiencies that translate into big savings and better profits for their customers.

They’re showing what it means to be a digital transformation winner, and the overall technological landscape will continue to rapidly progress.

As I’ve said many times, the pandemic wasn’t the catalyst for the big tech push — it only further accelerated big trends that were already in place.

Although there’s been a lot of volatility in the market this year, particularly with tech stocks, it’s crucial for investors not to lose sight of the bigger picture while also dishing lagging picks.

The leverage of digital strategies used to be the driving force behind multiple expansion, and in 2020, it was the reason so many technology companies got to be so richly valued. Unfortunately, investors have learned since February that many of those valuations could not be supported, either by operational performance or the conviction of longer-term shareholders.

Related Post: 5 Digital Transformation Winners

As sentiment improves and the weaker investment stories attract short covering, savvy investors should consider liquidating certain positions.

While that’s important, it’s also important to keep certain winners.

Some tech giants have such an insurmountable advantage in their respective niches that investors should highly consider against ever selling.

Some names include:

•  Amazon.com, Inc. (Nasdaq: AMZN)

•  Alphabet, Inc. (Nasdaq: GOOGL)

•  Microsoft Corp. (Nasdaq: MSFT)

•  Nvidia Corp. (Nasdaq: NVDA)

As always, it’s important for individual investors to do their own due diligence … but remember the common themes I preach.

We’re only at the beginning stages of the digital transformation. It’s time all investors get on board.

Best wishes,

Jon D. Markman

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