Snowflake (SNOW): Bargain or Bomb?

[View in browser]( [The Juice Logo] BROUGHT TO YOU BY: [Logo]( Editor’s Note It’s Friday. Time to give you a stock pick from our sister newsletter, The Spill, so you can think about it over the weekend and maybe make a move Monday morning. While The Juice helps you be better with money across the board, The Spill focuses on stocks financial pros are researching and judges how good of buys they are. If you’re already sold, [you can sign up for The Spill – for free – here](. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D634429?utm_medium=ic-nl&utm_source=123176 ) Why Financial Pros Are Eyeing Snowflake (SNOW) Despite the Drop Data is the currency of the future. And every second, organizations generate mountains of it. But that means nothing unless you can turn it into actionable insights. The problem is pulling everything together from different sources. [Snowflake's (SNOW)]( genius lies in its ability to unify data across multiple cloud providers. Yet, despite 30% sales growth year-over-year, the stock dropped on the latest earnings report. However, according to our TrackStar data, financial pros have continued to search for the stock at a noticeably higher rate. While bears love to highlight the company’s negative earnings, there is something important they are missing. Snowflake’s Business As businesses increasingly rely on data to drive decisions, Snowflake is positioning itself as the go-to platform for turning information into action. With over 10,000 customers worldwide, Snowflake's cloud-based platform is revolutionizing how businesses harness their most valuable asset: data. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D634429?utm_medium=ic-nl&utm_source=123176 ) Brought to you by [Stansberry Research]( [Fed’s Secretive 2nd Move May Bring “Reckoning” to US Stock Market]( [ Stansberry Research - Fed’s Secretive 2nd Move May Bring “Reckoning” to US Stock Market]( $2 trillion has disappeared from the US government's books. The reason why is a new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... but could soon have an enormous impact on your wealth. According to Dan Ferris, the banking expert who once predicted the collapse of Lehman Brothers, what the Federal Reserve is doing today will soon ignite a major market event that will catch millions of Americans off guard. "Millions are about to be blindsided," says Ferris, "unless they take the time now to prepare." He now recommends you consider moving money to a unique "escape" investment right away. (It's not gold, real estate, or a cryptocurrency.) Ferris's research has been followed by names at the most powerful banks in the world, such as JP Morgan, Barclays, and the Royal Bank of Canada. But because time is running low, Ferris has agreed to publish his latest findings online for free. [Click here to learn the full details.]( Continued... Operating in more than 40 regions globally, the platform tackles a range of data workloads, from warehousing to data science. Its consumption-based pricing model means customers only pay for what they use - a refreshing departure from traditional software licensing. Snowflake’s platform helps companies connect data from different sources, creating datasets they can use. Not only is this critical for understanding operational data, but also for creating useful AI models. [Data] Source: SNOW Q2 2025 Investor Presentation Snowflake's Q2 fiscal 2025 results paint a picture of a company on fire. Product revenue surged 30% year-over-year, hitting $829 million. The company now boasts 510 customers each spending over $1 million annually on the platform - a testament to Snowflake's ability to hook and scale with major players across industries. Snowflake recently rolled out Iceberg tables, allowing customers to tap into compute services without storage requirements. This move, coupled with aggressive investments in AI capabilities, signals Snowflake's determination to stay ahead in the fast-paced world of data analytics. Financials [Financials] Source: Stock Analysis Snowflake has grown from just under $100 million in sales to over $3.2 billion in five years. During that same period, gross margins expanded by 20%, while free cash flow margin turned positive, climbing to just shy of 26%. Operating and profit margins turn negative thanks to heavy stock-based compensation. That’s why we see high cash flows but negative earnings. In fact, the company generates $1.2 billion in free cash flow annually, which it has recently deployed to repurchase $1.7 billion of shares, yielding a healthy 4.9% return. However, many wondered why the company recently chose to issue $2 billion in convertible bonds, given it holds over $3 billion in cash on the balance sheet and very little debt. It seems a bit shortsighted to use such a move just to repurchase shares. Valuation [Valuation] Source: Seeking Alpha Snowflake’s stock isn’t cheap, whether you’re looking at it on a non-GAAP trailing 12-month P/E or price-to-cash flow basis. It’s notably more expensive than every other stock on the list, save for [Cloudflare (NET)]( and [MongoDB (MDB)]( on price-to-cash flow. It’s also one of the more expensive stocks in terms of price and enterprise value-to-sales ratio. Growth [Growth] Source: Seeking Alpha Snowflake delivers solid revenue growth, which is expected to continue in 2025. In fact, it boasts the best average annual growth rate over three and five years among all the stocks listed here. And, its free cash flow average growth over the past three years at 58% is second only to Cloudflare. Profitability [Profit] Source: Seeking Alpha None of the companies on our list generate positive net income. However, most face heavy stock-based compensation costs. Consequently, they all generate positive free cash flow, of which Snowflake takes the top spot. The negative earnings are why we see the negative returns on equity, assets, and total capital. [Brace for a new dawn in U.S. stocks]( CNBC's Jim Cramer once said: "I learned a long time ago not to be on the other side of a Chaikin trade." Since Chaikin accurately predicted the 2012 Priceline collapse, the 2020 crash, and the 2022 bear market, over 1 million people have chosen to follow his Wall Street warnings. Today he's stepping forward with a new warning – one he's never shared with the hedge funds, banks, and brokerages he worked with over 50 years on Wall Street. "A new dawn is coming to the U.S. stock market," says Chaikin, who's traded through nine bear markets. "It's time to throw out the investment blueprint of the last decade and prepare for a massive shift." [Click here to access his new warning, and #1 stock recommendation.]([Ad] Our Opinion 5/10 Snowflake demonstrates a capacity for consistently high sales growth that can translate into cash flow. However, the stock is very expensive, and we question the decision to issue debt to fund share repurchases. The company also faces heavy competition from Microsoft and others. For these reasons, we’d prefer to wait for shares to come down quite a bit, even as much as 50% before taking a position. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D634429?utm_medium=ic-nl&utm_source=123176 ) Proprietary Data Insights Financial Pros’ Top Internet Services & Infrastructure Stock Searches in the Last Month Rank Ticker Name Searches #1 [SNOW]( Snowflake 21 #2 [OKTA]( Okta 1 #3 [TWLO]( Twilio 1 #4 [NET]( Cloudflare Inc Cl A 1 #5 [MDB]( MongoDB 1 #ad [Unlock Daily Stock Gems - FinPro Secrets Spilled!]( News & Insights Freshly Squeezed - [This AI Software Stock is Now a Strong Buy, Says Wall Street]( - [Diversify Your Portfolio: Beyond Stocks]( - [Should You Buy ETFs, Individual Stocks Or Both?]( - [Check Out The Juice’s Favorite ETF Screen]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D634429?utm_medium=ic-nl&utm_source=123176 ) [We want to hear from you. 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