Palantir Technologies‘ (NYSE: PLTR) stock has embarked on a meteoric rise of over 150% in the past year, drawing attention as a pioneer in data mining and analytics software. The company has dazzled investors with its steady revenue growth and enhanced profitability, primarily attributed to the thriving U.S. commercial segment offsetting the slower pace in its government business. This achievement is further bolstered by decreased stock-based compensation and stringent cost-saving strategies.
Palantir’s recent strides in unveiling AI-powered tools, empowering clients to craft their AI applications, sparked euphoria among bulls. However, as I pointed out earlier, the stock’s valuation remains lofty in relation to its growth metrics.
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Looking ahead to 2024, analysts anticipate Palantir’s revenue and adjusted earnings to expand by 22% and 36%, respectively. Yet, with a stock trading at 74 times forward earnings and 19 times this year’s sales, caution beckons.
If the market reevaluates Palantir as merely another growth entity rather than an AI-centric marvel, its upside may find constraints. In light of this, rather than chasing Palantir’s recent surge, I advocate exploring three other growth stocks with millionaire-making potential: Uber Technologies (NYSE: UBER), Duolingo (NASDAQ: DUOL), and Workday (NASDAQ: WDAY).
Uber: A Ride to Riches
Uber’s stock has ascended by an impressive 120% in the past year, perched close to its historical peak. The market bull run ensued as the mobility and delivery services provider witnessed stabilized revenue growth, improved take rates, divestment from lower-margin ventures, and achieved profitability based on generally accepted accounting principles (GAAP).
Projections spanning 2023 to 2026 envision Uber’s revenue soaring at a compound annual growth rate (CAGR) of 16%, its operating margin more than tripling from 3% to 13%, and net income escalating at a CAGR of 48%. Fueled by market share gains in ride-sharing and delivery, augmented pricing power, and cost efficiencies from scale, Uber’s future appears promising.
Trading at 60 times forward earnings and 4 times this year’s sales, Uber’s valuation appears rational against its growth backdrop. Boasting 150 million monthly active users by 2023’s closure, Uber boasts a compelling position to outmaneuver rivals and seize opportunities in the expanding ride-hailing and food delivery arenas.
Duolingo: Learning the Language of Success
Duolingo’s stock has nearly doubled in the past year but hovers around 25% below its previous zenith from last December. The online learning stalwart reigns as the proprietor of the world’s most downloaded online learning app, captivating 83.1 million monthly active users.
Duolingo’s arsenal encompasses online courses spanning 40 languages, an independent English proficiency test, alongside innovative apps for phonics, math, and music instruction. Disrupting legacy competitors by infusing gamification into learning, Duolingo’s pandemic-era popularity peaked.
Although growth moderated post-pandemic, analysts foresee a 29% CAGR in revenue from 2023 to 2025, underpinned by net income growth set to surge at a remarkable 177% CAGR in the same period. This upswing will be fueled by market disruption in online education and platform expansion beyond core language instruction.
While Duolingo’s stock may appear steeply priced at over 200 times forward earnings, it remains reasonably valued at 45 times adjusted EBITDA and nine times projected 2024 sales.
Workday: Navigating the Cloud for Success
Workday revolutionized human capital management (HCM), payroll, and budgeting software domains with its cloud-based offerings, orchestrating streamlined operations and entrenching customers through sticky subscriptions. The company further expanded its footprint with cloud-based student information services.
Benefitting from the digital metamorphosis of corporate behemoths, Workday and its cloud-based compatriots thrive. Immune to macroeconomic gusts, this secular trend often compels firms to expedite digital integration and replace human roles with automated software during economic downturns.
Workday’s subscription backlog burgeons, accompanied by expanding margins. Analysts envision revenue scaling at a 17% CAGR from fiscal 2023 to fiscal 2026 while adjusted EBITDA surges at a 22% CAGR. Crossing the profitability threshold on a GAAP basis in fiscal 2024 further elevates the company’s appeal.
Currently trading at 10 times this year’s sales and 38 times adjusted EBITDA, Workday’s valuation, while not bargain-basement, suggests ample growth runway in sync with the burgeoning cloud-based HCM landscape. Workday’s recent foray into the Workday AI Marketplace underscores its latent AI market prospects.
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Leo Sun holds no positions in the mentioned stocks. The Motley Fool has established positions in and endorses Duolingo, Palantir Technologies, Uber Technologies, and Workday. The Motley Fool abides by a rigorous disclosure policy.
The opinions expressed here reflect those of the author and do not necessarily mirror Nasdaq, Inc.’s viewpoints and stances.
