2024’s Market Rally: Unveiling Growth Stocks for Optimal Returns
As 2024 gears up, the financial markets are abuzz with speculation and anticipation. The S&P 500 index has come tantalizingly close to setting a new record high, pulling back just slightly in the early days of 2024 trading. Despite this pullback, the benchmark index is down only 2% from its peak. Several catalysts suggest that the market could experience a bull rally this year.
Historical trends hint at another strong bullish phase on the horizon. Investors who choose top growth stocks are likely to see substantial returns when positive momentum surpasses the market’s previous peak. Two such promising stocks are Palantir (PLTR 0.48%) and Paycom (PAYC -1.36%), both trading at significant discounts compared to their previous highs. They have the potential to deliver impressive returns for investors in the next bull market.
Palantir
Palantir Technologies Inc., a leading player in the Artificial Intelligence (AI) revolution, specializes in analytics software. The company’s mission is to develop products for human-driven analysis of real-world data, meeting problems where they live. In May, Palantir launched its Artificial Intelligence Platform (AIP), a new software system helping organizations leverage data for more efficient operations and faster building.
By the third quarter of last year, nearly 300 organizations were using Palantir’s AI platform, showing a significant increase from the second quarter when the platform had over 100 enterprise customers. Concurrently, Palantir’s overall revenue rose by 17% year-over-year to reach $558 million. About 55% of Palantir’s third-quarter sales came from government customers, but more rapid growth among private sector clients is poised to accelerate the company’s overall sales expansion.
Palantir has been improving its profitability significantly. In the third quarter, the company posted $72 million in net income and a net income margin of 13%. It has recorded profitability for four straight quarters on a generally accepted accounting principles (GAAP) basis and expects to remain profitable. This profitability trend suggests that Palantir can continue strengthening its impressive balance sheet, which already boasts about $3.3 billion in cash and equivalents and zero debt.
Paycom
Paycom is a payroll and human resources software specialist that has seen uneven performance recently. Despite underwhelming sales growth and forward guidance, Paycom’s shares lost roughly 33% of their value in 2023 and are now down about 63% from their peak.
Despite this, Paycom still managed to grow sales by 30% annually. Following the slowing growth in last year’s third quarter, management’s midpoint targets called for growth of roughly 14% for Q4 2023 and annual growth of 11% for 2024.
Ultimately, both Palantir and Paycom present promising investment opportunities for risk-tolerant investors seeking to capitalize on the potential bull rally of 2024. As these companies continue to innovate and expand their reach, they hold the potential for stellar returns.
