Robin Hood inspired a generation of young investors to go public and save for the future. But that’s only half the battle. The other half is learning to identify high quality investment opportunities.
In context, the average Robinhood user is 31 years old, which means they have about three decades before retirement. Given this time horizon, a long-term buy-and-hold strategy can create life-changing wealth. In that sense both of them Palantir (NYSE: PLTR) and city ââsquare (NYSE: SQ) what smart investments look like for Robinhood dealers.
Modern companies generate enormous amounts of data. Unfortunately, they also rely on an ever-increasing number of applications and infrastructures, and the data created by these technologies is often stored in isolated systems.
Palantir was designed to solve this problem. Its software platforms – Gotham and Foundry – enable customers to integrate, analyze and understand data. In simpler terms, Palantir helps its customers work more efficiently by making data-driven decisions.
Gotham is specially designed for government customers. American intelligence agencies have used this technology in counterterrorism efforts in places like Afghanistan and Iraq. Meanwhile, Foundry is bringing the same functionality to the commercial sector, helping clients solve complex problems in all industries from healthcare and energy to manufacturing and retail.
In both cases, Palantir offers granular access controls that customers can use 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 the FBI. These intelligence agencies use Gotham to extract intelligence from the treasures of top-secret data – and if they’re happy with Palantir’s security standards, I doubt many other companies will object.
Financially, Palantir’s numbers are looking pretty good. Revenue reached $ 1.1 billion in 2020, up 47% from a year earlier, and revenue growth even accelerated to 49% in the first quarter of 2021. The bottom line is that Palantir generated $ 116 million in free cash flow in the first quarter, and the company is now free cash flow positive on a 12-month basis. In other words, the company can finance its operations without issuing new bonds or equity.
As a caveat, Palantir only has 149 customers, and its average revenue per customer rose 29% to $ 8.1 million in the first quarter of 2021. Investors should keep this in mind in the second quarter results, which will be released on August 12th. the company would take a big hit if it lost few customers.
Despite this risk, I think the future looks bright for Palantir. Management estimates its market opportunity at $ 119 billion, and the company believes it can grow sales by at least 30% annually through 2025. Because of this, you should consider buying some stocks of this growth stock.
Square’s mission is to help everyone participate in the economy and thrive. To that end, the seller ecosystem includes hardware, software, and services that help merchants manage their business across digital storefronts and physical locations.
On the other hand, Square’s cash app ecosystem is designed for consumers. This product brings together banking and brokerage services and enables users to send, spend and invest money from a single platform. In particular, Square recently redesigned its user interface to simplify the deposit process. This may sound trivial, but the cash inflows are the main driver behind Cash App’s gross profit.
Square released its second quarter results earlier this week, and the numbers were once again impressive. Gross profit rose 91% to $ 1.1 billion, driven by strong growth in both the seller and cash app ecosystem. The company also reported earnings of $ 0.40 per diluted share compared to $ -0.03 per diluted share last year.
Looking ahead, I think Square is well positioned to maintain its momentum. The company recently announced plans to acquire the Buy Now, Pay Later (BNPL) company additional payment in stock for $ 29 billion. Despite that high price tag, this move could accelerate the growth of Square’s entire business.
How is that going to happen? Afterpay’s platform offers sellers a number of benefits, including improved conversions, a larger shopping cart size and a higher frequency of purchases. At the same time, the commitment of the Cash App is to be increased, as users can use the platform to discover dealers and BNPL offers.
That’s why this stock looks like a wise long-term investment.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.