Legendary investor Peter Lynch is quoted as saying: “A lot more money is lost by investors trying to predict corrections than gets lost during the corrections themselves.” In other words, even if the market looks like it could crash, no one really knows the future, and attempting to time the market usually leads to missed opportunities.
From this perspective, it is better invest on a routine basis, even if it is a small amount of money. This way, you will build positions using dollar-costing averaging, which helps guard your portfolio from short-term volatility. With this in mind, Elastic and Palantir Technologies seem like smart stocks to snatch up right now. Here’s why.
Elastic is mostly a search company. At the core of its technology is the Elastic Stack, a set of software created to take in and log data from any possible source, then help clients analyze this information. Broadly speaking, these products have three possible uses: enterprise search, observability, and better security.
Elastic enterprise is a company search engine. This software allows users to move through company resources to get a particular item; it also allows developers to put search bars in their websites and apps. Similarly, Elastic observability bring all logs, metrics, and software traces together, allowing tech teams to look at performance data, troubleshoot issues, and keep critical business systems online. And Elastic security allows the same features to enable better threat detection.
The company has grown its top line fast. And while Elastic is not profitable on a GAAP basis, it generated $9.1 million in free cash flow over the past year.
The company also recently enhanced its security products with the launch of a detection and response system, a product that brings together security information and endpoint protection, event management, and cloud security. The company has also released new features for its enterprise search and observability software, simplifying data analytics to make searching and automating analysis even easier.
2. Palantir Technologies
Palantir helps its customers manage and make better sense of big data. The company’s software — Gotham (for the government) and Foundry (for companies) — simplify data analytics, allowing them to unify siloed data, make better decisions, and building AI models and data-focused applications.
The company’s top line is expanding at a steady rate, and Palantir produced $61.7 million in free cash flow over the previous year.
During the past quarter, Palantir ended 62 new deals worth $1 million or more, and 21 of those contracts are worth over $10 million. The company also expanded its commercial clients by 32% on a sequential basis. This should aid in supercharging revenue from the commercial segment, which has been expanding more slowly than sales in their government sector.
Going forward, digital transformation will accelerate, and companies and governments that possess the tools to use the data will stand to gain a very competitive advantage. This tailwind should be a powerful driver for growth at Palantir.
Author: Steven Sinclaire