If you had plunked down $1,000 into either Veeva Systems (NYSE:VEEV) or Teladoc Health (NYSE:TDOC) stock a year ago, you would have more than doubled your money by now. To some, both stocks may now look overpriced compared with their earnings, but that metric can fail to capture potential upside for growth stocks with marked revenue expansion.

Veeva provides cloud-based software for pharmaceutical and life science companies, assisting them in the regulatory process and in sales. Teladoc is the best-known virtual healthcare provider, with its services used by 40% of Fortune 500 companies.

Both companies grew in part this past year because of factors related to the pandemic, but I see more promising growth ahead for Veeva.

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Veeva's growth continues to accelerate

Veeva's stock is up more than 80% over the past year. It is trading at a crazy-high 136 times earnings, showing just how enthusiastic investors are about the company. A quick look at the financials shows why: Veeva has seen 22 consecutive quarters of revenue growth since its initial public offering (IPO) in October of 2013. In 2020, Veeva earned $1.1 billion in revenue -- a rise of 28% year over year -- and management expects to make about $1.4 billion in revenue this year.

Net income for 2020 was $301 million, a rise of 31% over 2019, and Veeva has also steadily increased non-GAAP (adjusted) gross profit margin, from 67.2% in 2016 to 74.7% this past year.

More than 81% of the company's revenue is subscription-based, originating from its more than 850 customers. Those customers include major pharmaceutical companies such as Bayer and GlaxoSmithKline, several smaller biotechs, and six of the top seven global contract research organizations that run clinical trials for pharmaceutical companies.

VEEV Chart

VEEV data by YCharts

Teladoc still has room to grow after the pandemic

Teladoc's shares have climbed more than 108% over the past year. Because of the pandemic, many people used telehealth initiatives for the first time in 2020, and Teladoc benefited.

The company uses mobile devices, video, and the internet to help physicians and behavioral health professionals connect with corporate employees in virtual visits. The idea is that telehealth can reduce costs for employers and employees, as well as for the employers' insurance companies.

Teladoc reported $1.09 billion in revenue this year, a rise of 98% year over year, and total visits climbed 156% to 10.6 million. Adjusted gross margins declined to 64.3% compared with 66.7% in 2019.

More importantly, the company still lost money, more than $485 million for the year, compared with $98.9 million for 2019. That's not a disaster in itself. A lot of growing companies lose money while they increase revenue. However, the company's total long-term debt of $953.4 million will handicap it as it tries to fend off competition in the growing telehealth space from the likes of Amazon's Amazon Care segment and Amwell, which just had its IPO in September.

Teladoc's $18.5 billion merger with Livongo, which was completed at the end of October, ultimately should be a boon and makes sense from a synergy standpoint. However, Livongo, like Teladoc, was growing revenue but was still unprofitable at the time of the merger, so the deal added to Teladoc's debt.

The cost savings from telehealth means that use of the practice is likely to grow; management cited Frost & Sullivan in saying it expects telehealth to have a compound annual growth rate of 38% over the next five years. Still, there are questions about how much growth might slow once the pandemic ebbs. The company itself forecast slower revenue growth for 2021, albeit still with an 82.8% improvement over 2020.

Both choices are good, but one is better

Given the likely growth ahead in cloud-based software and in telehealth, both companies should have years of increased revenue ahead, so either stock is a good choice for long-term investors. Of the two, I prefer Veeva because it is already profitable and has developed a niche market where it has little competition.

With its forward price-to-earnings ratio of 93.28, I can see the arguments that it is overpriced, but I think that concern is overblown if you look at the company's record of revenue growth. Teladoc may take a while to combine its business with Livongo, but in the long run, I think it will see improved profitability from the merger. In the short term, however, I see more potholes ahead for Teladoc in the coming year than for Veeva.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.