The rally that began early last year continues to push the market into the stratosphere. The S&P 500 hit a record high this week, while the Nasdaq Composite is within striking distance of a new all-time high, sitting roughly 2% below its peak (as of this writing). The market's relentless rise has many stocks at or near new heights, leaving some investors to wonder if the rally still has room to run.
UBS analyst Mark Haefele remains bullish. "All-time highs often generate investor concern that markets have peaked. Such worries are not supported by history," he wrote in a note to clients. XM Investment analyst Marios Hadjikyriacos agrees. "Stock markets are enjoying the best of all worlds, buoyed by a resilient U.S. economy and speculation that Fed rate cuts are just around the corner, helping to justify stretched valuations," he wrote. It's worth noting the Fed did, in fact, cut rates last week, helping propel the market to even greater heights.
Despite the ongoing rally, there are still opportunities to be had, including some stocks that have triple-digit upside, according to some veteran analysts. With that as a backdrop, here are two supercharged growth stocks with additional upside of 169% and 160% respectively.
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Palantir Technologies: Implied upside 169%
One of the biggest roadblocks to the adoption of artificial intelligence (AI) is that many companies simply lack the know-how to implement this cutting-edge technology -- while still getting their money's worth. That isn't surprising, particularly given the expertise needed to get these systems up and running. That's where Palantir Technologies(NYSE: PLTR) comes in.
The company has a long and compelling track record for creating AI systems for the U.S. government defense and intelligence agencies. It wasn't long before Palantir turned its focus and AI expertise to delivering actionable intelligence for enterprises.
The advent of generative AI early last year was right in the company's wheelhouse, and Palantir quickly created a framework that businesses could use to deliver quantifiable results. The fruit of its labors is its Artificial Intelligence Platform (AIP), which provides customized solutions to everyday business dilemmas.
It was Palantir's brilliant implementation strategy that helped bridge the knowledge gap. The company offers interactive sessions dubbed "boot camps." These gatherings, which last from one to five days, pair Palantir engineers with business and government customers to help them solve company-specific challenges. The company has sponsored more than 1,300 boot camps since late last year, helping fuel robust sales.
In the second quarter, Palantir cited numerous examples of boot camps that resulted in seven-figure deals within weeks after attendance. In all, the company closed 96 deals worth more than $1 million during the quarter. Of those, 33 were worth at least $5 million, and 27 were worth at least $10 million, which helps illustrate the value of these sessions to customers.
Greentech Research investment analyst Hilary Kramer is the most bullish among her Wall Street colleagues, suggesting that Palantir "easily can be" a $100 stock over the next few years. That represents a potential upside for investors of 169% compared to Wednesday's closing price. The analyst said Palantir is her "absolute 100% favorite," citing the company's ability to use data to supply "actionable decision-making."
At 218 times earnings and 35 times sales, Palantir seems exorbitantly expensive. However, its forward price/earnings-to-growth (PEG) ratio, which factors in its accelerating growth, comes in at 0.35, when any number less than 1 is the benchmark for an undervalued stock.
Symbotic: Implied upside 160%
Given the growing importance of digital retail, one area ripe for disruption is warehouse automation, and Symbotic(NASDAQ: SYM) is an emerging power player in the space.
The company uses custom AI solutions to automate the processing of pallets and individual cases, helping to maximize every available inch of warehouse space. Symbotic pairs advanced algorithms with a cadre of smart robots that work together to load and unload trucks, stack pallets, and even isolate individual crates, squeezing more inventory into less space.
This increases efficiency, reduces labor costs, and decreases transportation and operating expenses, helping the system pay for itself over time. Symbotic estimates that over its useful life, each "module" can pay for itself multiple times over, saving businesses tens or even hundreds of millions of dollars. The company boasts a bevy of household names as customers, including Walmart, Target, Albertsons, and C&S Wholesales Grocers.
The company continues to generate robust results. For its fiscal 2024 third quarter (ended June 29), Symbotic generated record revenue that grew 58% year over year to $492 million, while the company slashed its losses by 71%, resulting in a loss per share of $0.02. That said, Symbotic has been consistently free cash flow positive, which suggests it's on track for profitability.
In the wake of the company's financial report, Cantor Fitzgerald analyst Derek Soderberg maintained his overweight (buy) rating and $60 price target on the stock. That represents a potential upside of 160% compared to Wednesday's closing price. The analyst believes that, despite some deployment challenges, as the systems improve, Symbotic can generate 10% annual recurring revenue from its hardware.
It's worth noting that an "anonymous" short report posted online alleges that Symbotic disclosures are misleading and most analysts on Wall Street are being duped. It's interesting that none of the analysts who cover Symbotic have even bothered to acknowledge the report, which suggests it's much ado about nothing. That said, it does add an element of the unknown -- and by extension risk.
As with many high-growth stocks -- particularly ones that don't yet generate a profit -- Symbotic stock is a bit riskier, so any position should be sized appropriately with that in mind. Furthermore, Symbotic isn't cheap, currently selling for roughly 6 times next year's expected sales. Those caveats aside, as a leader in an emerging industry, Symbotic has a long runway for growth ahead and could be a big winner in the AI revolution.
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Danny Vena has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies, Target, and Walmart. The Motley Fool has a disclosure policy.
