A 12% pullback in a week! Yikes! Is it time to buy or bail on Veeva Systems (VEEV)? (December 02, 2016)
VEEV
Veeva ( NYSE:VEEV ). Here is the deal: This is like a data software provider, basically in the life sciences industry. Healthcare, which, from what I understand, is kind of a growing field these days with everybody getting old and sick. So Veeva ( NYSE:VEEV ) is really kind of in the sweet spot here. But what I want to do is, look and see how this stock has been performing on the weekly chart. This is the all time high, like the second week of trading back in 2014, and it is pushing up against that now. It has had how long to grow its business? Three years. So we got a little enthusiastic here when the stock first became public and that was a long ride straight to heaven’s basement we will say, over the last 6 months or so. But now this has climbed back and business is good. Their earnings growth is like off the charts good. Every quarter they are growing. Their revenue or sales growth, 30s, 30, 31, 35, 33 percent per quarter. This is the growth versus the same quarter the previous year.
Their annual growth rate is like 73 percent. And their P/E is 66. Now you might say, “Oh, 66 P/E, that is expensive.” Guys, we want the expensive ones, because that means there is a reason why people want it. Is it a wonder why the most awesome, most popular in and demand clothes are never the ones that are on sale? So Veeva ( NYSE:VEEV ) is expensive. But it broke out of this little cup and handle pattern. Came all the way up here to mark this new top at $48.00, so it is not a momentum stock right now. It has never really been a momentum stock except for this little whoop-de-do right here (which is an old established pattern name that I just made up). A big move here. But now what you want to do is kind of be thinking more in the long-term, think of the big picture. You get a little sideways consolidation, a pop up, so it is kind of a cup and handle type thing. And what had been resistance, right here, is now support, and this is the top of the channel.
So here is the trade: You are looking at buying the stock, 3 down days in a row but closing off of the low on Friday. You buy a little bit of stock and keep a pretty tight stop there. And if that is too tight for you then you buy a little bit of stock and even keep a tight stop down there. I don’t think you need to keep it that loose. I think you put a stop right in here. You buy a little bit of stock; and by the way, if you get shaken out, dust yourself off, getting shaken out is a part of trading, it really is. The best traders in the world will tell you that. If you can’t get shaken out then you really need to find another job. Because it doesn’t matter how good you are, there are going to be times when you buy and you get shaken out. You sell and then the stock moves in the direction that you thought it was going to without you, and you are going, “Oh crap!”
So what the good traders do is, if they have an idea, they take that trade. And then if the stock shakes them out, because they have got their downside covered too, they sell for a loss. But then if the idea is still a SOUND one and the stock starts telling them, and this is the important part, the stock starts TELLING them that their idea was a sound one, then they go in again. They were just a little early. That is DIFFERENT than you having a good idea, the stock takes you out of the trade. Or maybe you don’t have a stop in so you are still in the trade, and as the stock moves against you, by golly you just decide that that was a really good idea that you had all the way up until you sell at $30.00, and then the stock moves up. So you keep your risk to a minimum. You prosecute your idea. If the stock takes you out, get out, but watch the stock. If it starts to show you that your idea actually was a good one, get back in. If it doesn’t show you, Boom! You are out of the trade, you’re done. I think this is a buy right here. I think it is going to move higher.
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