2. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Total Value of Hedge Fund Holdings: $12. 9 Billion
Ranking 2nd on the 10 best young stocks to buy and hold for 20 years is Snowflake Inc. (NYSE:SNOW). The cloud computing-based company offers data cloud to notable users such as Capital One Financial Corporation (NYSE:COF), Nike, Inc. (NYSE:NKE), and GEICO, among others. Other companies using Snowflake’s platform are Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). Snowflake’s technology has been used by Amazon.com, Inc. (NASDAQ:AMZN) for its S3 since 2014, while Microsoft Corporation’s (NASDAQ:MSFT) Azure has been utilizing it since 2018.
Snowflake Inc. (NYSE:SNOW) posted its revenue of $228.9 million in the first quarter of 2021, up 110% year-over-year. The 52-week price range of Snowflake Inc. (NYSE:SNOW) is $184.71-429.00. Shares of SNOW jumped 12% over the last three months. On June 14, Deutsche Bank maintained a Buy rating on Snowflake Inc and raised a price target to $265.
There were 71 hedge funds that reported owning stakes in Snowflake Inc. (NYSE:SNOW) at the end of the first quarter, up from 54 funds a quarter earlier. The total value of these stakes at the end of Q1 is $12.9 billion.
RiverPark Funds mentioned Snowflake Inc. (NYSE:SNOW) in its Q1 2021 investor letter. Here is what the fund said:
“We also established a position in Snowflake during the quarter. Snowflake offers cloud-based data storage and analytics, generally termed “data warehouse-as-a-service.” The data warehousing market—created by the massive, growing amount of user, customer, and account data and the need to search and analyze it—has historically stored its data on physical servers located on-premises. The cloud data platform market—storing data off-premises 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. All of which has led to Snowflake being among the leaders of this highly fragmented market, posting 124% revenue growth last year. SNOW’s growth comes from the combination of more customers—which grew 73% last year—and customers buying more services—the company boasts an amazing 150%+ net customer retention. The company’s growing scale has also led to increasing gross margin and operating leverage, up 1,100 basis points and 8,200 basis points, respectively, over the past two years. The company has guided to FCF break-even this year, and with the company’s capital expenditure-light model—Snowflake uses the public cloud for hosting—we expect FCF to grow much faster than revenue growth, which we forecast to grow comfortably more than 50% per year for the next several years. Additionally, we have great confidence in the SNOW management team, which previously had an enormously successful run guiding one of our other core Cloud software holdings ServiceNow.”
