3 overpriced stocks that are always better investments than Dogecoin


Investing in cryptocurrency has been popular over the past year as Bitcoin reached record highs. But even if you are bullish on digital currencies, you would be taking a significant risk by investing in Dogecoin, which is highly speculative and volatile, even for cryptocurrency. In the last month alone, it has lost a third of its value while the S&P 500 increased by more than 3%.

Actions like Veeva Systems (NYSE: VEEV), Starbucks (NASDAQ: SBUX), and Netflix (NASDAQ: NFLX) are far from cheap, but they are still much more viable investments than Dogecoin. Given their proven business models and plenty of growth opportunities to come, if you are willing to be patient with these actions, you can get great long term return. With Dogecoin, this is not as likely.

Image source: Getty Images.

1. Veeva systems

Healthcare companies aren’t known to be terribly tech savvy. While they can provide excellent health-related products and services, they may lack the efficiency and technological capabilities to keep their operations as smooth as possible. This is where Veeva comes in. The company offers two subscription products: Veeva Vault and Veeva Commercial Cloud. The former provides life science companies with content and data management applications, while the latter focuses on data analytics solutions. Revenue from subscriptions to these services accounts for nearly 80% of Veeva’s revenue, while professional services make up the remainder.

In the first quarter of fiscal 2022, the company added 59 customers during the period ending April 30, a record for the company. Its revenue of $ 434 million increased 29% from the same period last year. For the current fiscal year (which ends January 31, 2022), Veeva expects revenue to be approximately $ 1.8 billion, an increase of over 23% from fiscal year 2021 of less than $ 1.5 billion.

The only downside is the stock’s price / earnings (P / E) multiple of over 120. This is an obscene price tag given that the average hold in the SPDR S&P 500 ETF Trust is trading at just 26 times its profits. However, in the long run, as more businesses go digital and Veeva adds more customers, this profit multiple will decrease. While not a cheap stock to buy today, Veeva can still prove to be a good long-term investment.

2. Starbucks

Another stock that trades at an incredibly high earnings multiple, Starbucks, currently has a P / E of 140. However, a difficult pandemic year has made this ratio look much worse than it will be in the future; Based on analyst projections, the stock’s forward P / E is much more reasonable at 39. Nonetheless, that’s a high price for a company that typically doesn’t generate much year-over-year growth. ‘other. In fiscal 2019, sales of $ 27 billion increased only 7% from the previous year.

But one of the reasons I’m optimistic for the future of the business is because it is focused on stores that primarily focus on pickup and / or drive-thru options – in other words. , stores that do not have seats. The company calls drive-thru its “most productive model,” a model that consumers should expect to see more of in the future. While the company isn’t abandoning its traditional storefronts, it places more emphasis on convenience. During his drive-thru, he deploys portable point-of-sale devices to improve this process and maximize throughput. This will help boost margins which, in turn, could lead to greater profitability down the road.

Before the pandemic, the company’s net margin was 14%, and its improvement will only make the company a much better buy in the long run. It also makes expansion much more likely to bring better results early on. Last month, the company announced it would expand to Barbados, its 10th largest market in the Caribbean.

Starbucks may not be a high growth stock, but if it can bolster its bottom line, even today’s high valuation could turn out to be a good deal years from now, when its margins are much higher. strong.

3. Netflix

Netflix is ​​trading at the lowest P / E on this list, but at over 60, it’s not a cheap buy either. The company spends a lot on content, but there is one big trend that investors love about the company: Its profits have steadily improved over the years. From a net profit of just 2% in 2016 to over 14% in the past 12 months, the company has strengthened its gross margin while spending less on selling, general and administrative expenses (as a percentage of revenue ) to strengthen his bottom line.

Equally impressive, the company is still generating solid numbers. In its latest earnings report, released on April 20, it exceeded expectations on both earnings and revenue. Sales of more than $ 7 billion for the period ending March 31 increased 24% year-over-year, even as the company faced growing competition from Disney and Comcast, which the latter launched its streaming service, Peacock, last year.

While investors may be down from subscriber additions (Netflix’s net subscriber additions of 3.98 million last quarter are lower than the 6.2 million analysts expected), which is important, is that Netflix’s bottom line is improving. Additionally, management believes the disappointing number of subscribers may be due to the pandemic, which has delayed the release of more content.

Regardless, Netflix is ​​still a household name, and it is proving to be a dominant force in the industry even as the competition intensifies, which is a good sign. It is not a cheap investment, but it is much safer than Dogecoin.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

Leave A Reply

Your email address will not be published.