Our Pros Weigh In On Whether Palantir Stock Can Hit $200
This week’s sentiment survey will tell us where our team stands on the stock market before digging in on Tesla, SpaceX, and Palantir. Plus, why your 401(k) may be invested in the wrong things.
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In this week’s survey, we follow up on Tesla (TSLA) and SpaceX (SPCX). Then we drill in to find out whether Palantir (PLTR) is a buy, sell, or hold.
We finish up with a discussion on stock picking. With just a handful of stocks making up 40% of the major indices, you’re effectively stock picking when you buy the S&P 500 or Nasdaq 100. At TheStreet Pro, we think you should be more intentional with your stock picking, and we wrap up today’s article with our contributors’ views on that, making the case that your retirement funds are probably invested in the wrong securities.
Part 1: TheStreet Pro’s Sentiment Survey Results
Question 1
Direction: Over the next 2-4 weeks, how do you feel about the S&P 500?
Score: -1
Commentary: This week’s score remains at -1, just a little bearish. With stocks trading at all-time highs, I think it’s right that our team show some level of caution. By the numbers, 3 members are bears, 3 are neutral, and just 2 are bulls. Lately, the optimists have been outperforming the pessimists, but will our bears have their day? We’ll see.
Question 2
Positioning: How are you currently positioned?
Score: +1
Commentary: 4 bulls beats 2 bears, but one of our bears is net short, hence the +1 rating, rather than a +2. So, does a -1 for direction combine with a +2 for positioning indicate that this market will continue to climb a wall of worry?
Part 2: Qualitative Questions
Question 1
A follow-up on Tesla. In The Surprising Tesla-SpaceX Correlation Investors Can’t Ignore, Ed Ponsi noted a correlation between TSLA and SpaceX. Over the coming weeks, around 1.5 billion SPCX shares will no longer be subject to the post-IPO lockup. What impact do you think this will have on Tesla? Why?
There was no real sentiment in our team’s answers, except that none of our team is bullish. While all generally believe the information is priced in, they do think there could be different kinds of pressures on demand for Tesla. Here are the most notable responses:
- Even if just 5 to 10% of those shares hit the market in the near term, it will weigh on the stock unless there is some compelling reason for buyers to step in. And right now, I don’t see any compelling reason to buy the stock.
- Tesla has a put option underneath it with the potential for being bought by SpaceX, just like Solar City was some years ago by Tesla.
- Could trigger some pressure on TSLA shares as folks look for sources to buy or add to existing SPCX positions.
Question 2
There were some big earnings results this past week. What stocks had the most surprising reaction to their results?
- The post-earnings selloffs for Sandisk (SNDK) and AMD (AMD) now seem to be part of a trend. Over the past few weeks were seeing a lot of negative reactions.
- DataDog (DDOG), which fell hard despite beating estimates and raising guidance.
- The earnings story is garbage. This has all been about Situational Awareness. Don’t fool yourself.
- Note: Situational Awareness is the AI hedge fund that blew up in July.
- What is surprising to me is how many secondary stocks are seeing strong positive moves on earnings. This is one of the better small-cap earnings seasons I can recall.
Question 3
Let’s talk Palantir. Shares ripped higher this week on the EPS and Rev beat. But the stock is still 25% off the all-time high of 207. Is there any chance of getting back to 200 this year? Why?
There was no consensus among our team. Some think the stock will head back to the old highs, while others see opportunities elsewhere. But read on, and I’ll share what Sarge is thinking, based on his latest articles. His track record with this stock has been impressive.
PLTR Bulls:
- This year? Possible will hinge on program wins being announced and other developments at the next AIPCon.
- Yes. Excellence in performance / perfect balance sheet / momentum-seeking algos
- Yes, with the strong earnings and likely another one coming in November.
PLTR Bears:
- Palantir definitely feels like an outlier among tech stocks right now. Great quarter, but I can’t help the feeling that they’re swimming against the tide, in terms of money flowing out of the technology sector
- No. The valuation at 200 is too aggressive, and the market isn’t going to make that mistake again. PLTR currently trades with a PE of 139 and a Price to Sales of 94.
- Not a stock I follow or own, nor do I have any intention of doing so
- Don’t know. Don’t care. SOX heading lower
- Overpriced and opaque
Let’s add to the analysis of Palantir. Stephen “Sarge” Guilfoyle has been a vocal bull on the stock, having initially purchased it under $20. In fact, he’s up around 911% on that initial position from 2023 and just raised his price target on the stock to $205, 17% above current prices.
Why is he bullish?
- Balance Sheet Strength: In Palantir Price Target After ‘Otherworldly’Surge, he noted that the company’s balance sheet is one of the strongest he’s seen in his 40-year career, with a “muscular” Current Ratio of 7.23, that rises to 11.59 when adjusted for deferred revenues.
- Technical Momentum: Shares blasted out of an inverse Head-and-Shoulders and have strong MACD and other momentum indicators as well as geopolitical sentiment that favors companies like PLTR.
Sarge currently holds the stock in his Sarge Folio
TipRanks’ Analyst Consensus price forecast is 197.89, 13% from current levels and not far off of Sarge’s forecast. Of the 22 analysts who rate the stock, 16 are buyers, 4 are holders, and 2 are sellers.
Question 4
Passive investing has done pretty well, but with 40% of the S&P now in just the top stocks, why do you think it’s time for stock pickers to shine?
- The market melt-up made some people look smart. From here, it’s picking the stocks that will move higher, while avoiding those poised to move lower, that will matter.
- Market concentration is at levels that historically have marked huge tops for equities.
- It is always time for active investing! As I mentioned, the good earnings reports from small caps are a good reason to focus on individual stock picking.
- If you’re going to own an index, the Equal Weighted versions are OK.
As we’ve talked about, our team believes that the risk levels are above average right now. But that doesn’t mean there aren’t opportunities. In fact, there are great opportunities for smart investors who know how to read the signs.
Concentration is at levels that have previously marked stock market tops. The amount of money in a handful of tech stocks is staggering, relative to the rest of the market. And your retirement money from each paycheck is blindly allocated to these companies. It’s not only that the stock market is concentrated, but your money is, too. If diversification is important, and we think it is, stock picking will help investors to reduce risk in their portfolios while finding new opportunities, like the small caps mentioned above.
And that’s why smart investors like you read TheStreet Pro. It’s not just about beating the market; it’s about making the right moves to stay safe.
Final Thoughts
Risk is high, but there’s plenty of opportunity for smart investors. We think that picking good stocks will pay off in the coming years and outperform simple index investing. There’s always a bull market somewhere, and our team is always looking for the next one. Human Intelligence beats Artificial Intelligence.
