While the past year has been great for a number of tech companies, particularly the mega-caps leading the stock market higher, a number of smaller players are in a bear market and well off their highs.
For companies working on long-term trends that could be big winners in the years ahead, the lackluster performance could mean a way to outperform the stock market in the year ahead as a rebound play.
One such company is Palantir (PLTR). The big data company is part of a massive and growing trend that intersects with a number of other major tech trends today. The company has continued to grow out its business, including a new agreement to provide its software analytics program to Hyundai Heavy Industries in South Korea.
Despite this and other positive developments, including a 35 percent jump in revenues last year, shares are down about 28 percent over the past year. The company also boasts nearly $2 billion in net cash.
Action to take: The company looks undervalued as a long-term tech trend, akin to buying any of the big multi-trillion-dollar tech companies a decade ago before their massive runs. Investors may like shares here, with the caveat that as a tech stock, it may never pay a dividend.
For traders, shares look oversold on a technical basis and about ready to move higher. The June $20 calls, last going for about $1.60, offer a leveraged upside to a rebound in shares in the coming months. Traders should look for high double-digit gains before taking profits.
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.