Some companies are cyclical, seeing customers appear in good times and disappear in bad. Those customers can be individuals, or entities like corporations or governments.
Companies that are building out corporate or government contracts right now may not fully book that revenue for some time. But when they do, if markets are looking up, they’ll be rewarded for solid long-term decisions being made today. That’s why investors should find companies ramping up their customer base in the current challenging markets.
One company making those moves now is
Palantir Technologies (PLTR). The big data company beat estimates on sales, and saw strong demand from the US defense sector.
While the market didn’t like the company’s results, it’s made the stock inexpensive enough to make for a compelling buy today.
Revenue is up 26 percent over the past year. The company now has over $2.4 billion in cash on the balance sheet, or more than 10 percent of its market cap. While not yet profitable, the company has continued to narrow its losses and grow in a challenging environment.
Action to take: Investors may like shares here. While the stock is a long way from paying a dividend, growth in the company’s customer base should translate to higher revenue and therefore a share price in the years ahead.
For traders, shares are likely to bounce following their earnings drop. The January 2023 $9 calls, last going for about $0.25, can deliver high-double-digit or even triple-digit returns on a quick bounce in shares in the coming weeks.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
