2 Most Important Growth Stocks Robinhood Traders Can Buy Now
Robin Hood inspired a generation of young investors to go public and start saving for the future. But that’s only half the battle. The other half learn to identify high quality investment opportunities.
For context, the average Robinhood user is 31, which means he has about three decades left before retirement. Given this time horizon, a long-term buying and holding strategy can create life-changing wealth. With this in mind, the two Palantir (NYSE: PLTR) and Square (NYSE: SQ) look like smart investments for Robinhood traders.
Modern businesses generate a huge amount of data. Unfortunately, they also rely on an ever-growing number of applications and infrastructures, and the data created by these technologies is often stored in siled systems.
Palantir was designed to solve this problem. Its software platforms – Gotham and Foundry – allow customers to integrate, analyze and understand data. Put simply, Palantir helps its clients operate more efficiently by making data-driven decisions.
Gotham was specially designed for government customers. US intelligence agencies have used this technology in counterterrorism efforts in places like Afghanistan and Iraq. Meanwhile, Foundry brings the same functionality to the commercial sector, helping customers solve complex problems in everything from healthcare and energy to manufacturing and retail.
Either way, Palantir provides granular access controls, allowing customers to monitor and manage who can access data and for what purpose. The secure nature of its platform is also evidenced by the company’s history with the CIA and FBI. These intelligence organizations use Gotham to extract information from top-secret data treasures – and if they’re happy with Palantir’s security standards, I doubt many other companies will object.
Financially, Palantir’s numbers look pretty good. Revenue reached $ 1.1 billion in 2020, up 47% from the previous year, and sales growth actually accelerated to 49% in the first quarter of 2021. In the end On account, Palantir generated $ 116 million in free cash flow in the first quarter, and the company is now positive 12-month rolling free cash flow. In other words, the business can finance its operations without issuing new debt or equity.
As a caveat, Palantir only has 149 clients and average revenue per client rose 29% to $ 8.1 million in the first quarter of 2021. Investors should keep an eye out for this in the second quarter results. quarter, which will be released on August 12. As it stands, the business would take a big hit if it lost a few customers.
Despite this risk, I think the future looks bright for Palantir. Management assesses its market opportunity at $ 119 billion, and the company believes it can increase revenue by at least 30% per year through 2025. That’s why you should consider buying a few shares of this growth action.
Square’s mission is to help everyone participate and prosper in the economy. To this end, its vendor ecosystem includes hardware, software, and services that help merchants run their business in digital storefronts and physical locations.
On the other hand, Square’s Cash App ecosystem is designed for consumers. This product unifies banking and brokerage services, allowing users to send, spend and invest money from a single platform. Notably, Square recently redesigned its user interface, simplifying the deposit process. It might sound trivial, but cash inflows are the main driver of Cash App’s gross margin.
Earlier this week, Square released its second quarter results and, once again, the numbers were impressive. Gross margin jumped 91% to $ 1.1 billion, driven by strong growth in the Seller and Cash App ecosystems. The company also reported earnings of $ 0.40 per diluted share, up from $ 0.03 per diluted share the previous year.
Looking forward, I think Square is well positioned to maintain momentum. The company recently announced its intention to acquire the company Buy Now, Pay Later (BNPL) After payment for $ 29 billion in shares. Despite the high price tag, this move could boost Square’s business growth.
How will it be? Afterpay’s platform offers a range of benefits for sellers, including improved conversion, larger cart size, and increased purchase frequency. At the same time, the Cash app is expected to see its engagement increase, as users will be able to use the platform to discover BNPL merchants and offers.
This is why this action looks like a smart long-term investment.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.