The market has been showing signs of life this year, but the S&P 500 remains down 10% since peaking in 2022. In a full-blown bull market, many businesses could see their valuations skyrocket, particularly those that are focused on growth. And a couple of unstoppable companies that investors may want to buy before that happens are Palantir Technologies (PLTR) and Pfizer (PFE).
1. Palantir Technologies
Palantir Technologies has been a hot stock lately, soaring more than 130% since the start of 2023. Artificial intelligence (AI) and the potential growth opportunities that it can open up for Palantir are what have been driving a lot of the recent bullishness for the business.
The company specializes in data analytics and helping both businesses and government agencies make quicker and better decisions. If AI can accelerate and improve that data analysis, that can enhance Palantir’s offerings and improve its efficiency. It has recently launched a new product, Artificial Intelligence Platform (AIP), which promises to “build everything faster with human-AI collaboration.” And demand has been taking off.
In a recent interview with Bloomberg, CEO Alex Karp said that the company has customers in the U.S. who are “calling us every day” and that it has received a year’s worth of inbound calls within about a month.
If those elevated activity levels translate into significant sales growth, Palantir could be on the verge of reporting some impressive numbers this year. In 2022, revenue of $1.9 billion rose by 24%. And that’s with the company’s growth rate slowing down.
While the stock may seem like it’s already a bit too hot to buy right now, shares of Palantir are still down close to 20% since the beginning of 2022.
Management is now expecting profitability to be the norm, and that could be an additional catalyst for Palantir. The company is not slowing down — in fact, it looks to be shifting into a higher gear. In a bull market, where investors are more willing to pay a premium for a growing business, Palantir could become an even hotter buy.
That’s why if you’re willing to hold on to the stock for multiple years, Palantir could be an attractive investment to buy and hold today.
2. Pfizer
Unfortunately, there isn’t nearly as much bullishness about Pfizer these days. The healthcare stock remains around its 52-week low, and its price-to-earnings multiple of less than 8 suggests more than just a healthy dose of skepticism from investors. The company benefited from its highly effective and popular COVID-19 vaccine, which helped it generate record-breaking sales last year, topping more than $100 billion.
Investors are now concerned about Pfizer’s future because it may be a long time before it gets back to those levels again. The government is no longer loading up on vaccines now that the public health emergency relating to COVID is over.
But Pfizer is already looking past that and has been involved in multiple acquisitions over the past few years in an effort to set up its business for longer-term growth to offset the impact of declining COVID revenue, as well as an inevitable drop in sales as multiple drugs lose patent protection this decade.
Pfizer’s biggest plans involve expanding its presence in oncology. In March, the drugmaker announced that it wants to buy biotech Seagen for $43 billion. Prior to that, Pfizer closed on acquisitions of Global Blood Therapeutics, Biohaven Pharmaceuticals, Arena Pharmaceuticals, and ReViral in 2022.
Pfizer is coming off a couple of years of strong free cash flow generation, which has bolstered its financial position. And as of April 2, the company still had around $20 billion in cash and short-term investments on its books, meaning that it still has the ability to pursue more deals if necessary.
Robust financial resources ensure that the company’s quest to get stronger and more diversified will continue. Pfizer is another unstoppable-looking business that may be worth investing in right now, especially with its price being relatively low and offering investors a good margin of safety.
— David Jagielski
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Source: The Motley Fool