Stocks rebounded slightly in early trading following yesterday’s turbulent session. Stocks dragged lower after multiple news outlets reported that President Joe Biden is slated to propose much higher capital gains taxes for the rich. The proposal would hike the capital gains rate to 39.6% for those earning $1 million or more, up from 20% currently, according to Bloomberg News. Indexes remained within 1.5% of their all time highs even after Thursday’s losses, which seems to be keeping investor enthusiasm in check.
We’ll have to wait until the end of the session to find out where stocks will close this week. In the meantime, the WSWD research team has a recommendation for our readers who are looking for a potentially big opportunity in cloud storage and analytics.
Every company on the planet is now chasing the cloud. This trend also got a huge boost from the pandemic and it’s now in panic mode. Snowflake provides ways for companies to better utilize their data over the internet. The company offers cloud-based data storage and analytics, generally termed “data-as-a-service.”
This is a simplified statement of what they do. Just know that what they provide is very practical. SNOW was an early mover and their potential is very real. So real, in fact, that even Berkshire Hathaway (BRK-B) jumped on the bandwagon. That was a huge surprise because of how long it took them to buy Apple (AAPL) stock. Warren Buffett had long shied away from tech and to see them embrace Snowflake is comforting.
The cloud data platform market — storing data off premise on cloud servers — is a relatively new $70 billion+ market. Significantly, incremental warehouse data capacity and renewals are expected to be driven by and to the cloud, with more than 75% of databases in the cloud by 2022.
Snowflake requires absolutely no infrastructure management from its users, is fully scalable for each customer, runs on Amazon, Microsoft, or Google cloud platforms, and most critically, Snowflake helps companies analyze their data. The company also has a unique, customer aligned billing model based on usage.
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The growth in Snowflake is phenomenal. Last year the company posted 124% revenue growth, putting SNOW among the leaders of this highly fragmented market. The company’s growth comes from the combination of more customers – customer base grew by 73% last year – and customers buying more services – the company boasts an amazing 150%+ net customer retention. SNOW’s growing scale has also led to increasing gross margins and operating leverage, up 1,100 basis points and 8,200 basis points, respectively, over the past two years.
SNOW investors have to deal with the falling knife aspect of it since the company IPOed back in September. In this case you can even say it’s a machete with a very small handle and a huge blade. But, the stock seems to have stabilized considerably and is now trading in range about 9% lower than where SNOW opened after its IPO. Everything is going right with improving profit margins and sales, but investors are temporarily freaked out, which could create a tempting opportunity. Since there’s no real value in the financial statements yet, the floor could still be below its current price, meaning the risk could be too great to jump in with both feet. Never-the-less, Snowflake is a compelling growth story, and for adventurous investors, this is likely just the beginning.
Where to invest $1,000 right now...
Before you consider buying Snowflake, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Snowflake.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.