Buy Alert: 2 Tech Stocks Trading at a Discount to Wall Street Estimates
October 18 2021 - 7:39AM
Finscreener.org
Several tech stocks have been hit
hard in recent trading sessions. For example, shares of Roku
(NASDAQ: ROKU)
and Palantir (NYSE:
PLTR) are down 31% and 38% respectively from
all-time highs. However, the recent pullback also creates a buying
opportunity for investors with a long-term view. Both Roku and
Palantir stand to benefit from secular tailwinds that make them top
bets at current prices.
Roku stock is up 1,300% since IPO
Roku went public in late 2017 and
the tech stock is up 1,300% since its initial public offer. It is
one of the
top players in the streaming
industry as the Roku
platform connects users wih content publishers. Its operating
system for connected TV or CTV has also gained massive traction
over the years and in Q2 it powered close to one third of global
streaming time.
In the June quarter, the number
of streaming hours on the Roku platform was 19% higher which was
significantly lower than the 65% growth experienced in the year-ago
period. But investors should note that viewership across streaming
platforms in the U.S. fell by 2% which shows Roku easily outpaced
the industry average.
Roku’s stellar customer
engagement metrics makes the platform extremely valuable to digital
advertisers. Now, similar to giants such as Netflix, Disney and
Amazon Prime Video, Roku is also looking to produce original
content for the Roku Channel which is an ad-supported
service.
In the
second quarter of
2021, the number of
active Roku accounts rose by 28% to 55.1 million. It more than
doubled monetized ad impressions in Q2 which meant revenue growth
stood at 81% year over year as Roku reported $645 million in
sales.
Roku is well poised to gain
momentum in the future on the back of rising CTV ad spending. In
the U.S. TV ad spend on CTV platforms is expected to rise from 13%
in 2020 to 17% in 2021, showcasing the increasing popularity of
online entertainment options.
Analysts expect Roku sales to
increase by 59.4% year over year to $2.84 billion in 2021 and by
37.3% to $3.9 billion in 2022. Comparatively, its earnings are
forecast to rise to $1.71 per share in 2022, compared to a loss per
share of $0.14 in 2020.
Roku stock is valued at a market
cap of $44 billion which indicates its forward price to sales
multiple is 11.3x which is not too steep given its growth
estimates. Wall Street is also bullish on Roku stock with a
12-month average price target of $460 which is 40% above its
current price.
Palantir Technologies is valued at a market cap of $47.9
billion
A company that builds and deploys
software platforms for the intelligence and counterterrorism
organizations in the U.S., Palantir Technologies is currently
valued at a market cap of $47.9 billion. The Palantir Gotham
platform enables users to identify patterns hidden within large
datasets and was used by the CIA to locate Osama Bin
Laden.
In the last decade, Palantir has
won contracts with several government agencies that include the
U.S. Coast Guard, the Air Force, Army and the Department of Health
and Human Services among others.
Palantir’s portfolio of products
include Foundry, a data analytics platform which is enterprise
facing. Foundry allows pharma companies to accelerate the drug
discovery process while financial institutions can detect and
prevent fraud.
In the June quarter, Palantir’s
revenue from government customers were up 66% to $232 million while
commercial sales soared by 28% to $143.5 million. Its
forecast to grow its sales by 38% to $1.51 billion in 2021 and by 29.4% to
$1.95 billion in 2022.
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