Valuations on tech stocks have been hit hard in the past year. That’s because a number of companies have shown that their growth projects were unable to handle a slowing economy. Other tech firms have had no such problems, however, even if these positive developments haven’t been reflected in their stock price.
One way to look at how these companies are performing is by looking at how their billables are changing now.
If a company is continuing to grow its customer base, or its revenue per customer, prices should go up in time.
One company continuing to grow its customer base now is big data firm Palantir Technologies (PLTR). The company has become a leader for tracking the growing risks to utilities from fire damage on the West Coast, among other new customers thanks to its ability to come up with reasonable solutions based on big data.
Action to take: Investors can buy shares of this mid-cap, high-growth company for less than its IPO price in late 2020, and more than 70 percent off its early 2021 speculative highs. As Palantir is an early-stage player, it’s a long way from paying a dividend, but shares should rise in time as the company continues to grow.
For traders, the December $9 calls, last going for about $0.64, can deliver mid-double-digit returns before expiration. Traders should continue to use market volatility to their advantage, and buy on a down day for shares, then flip on a rally day for the stock.
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.