In the wake of an impending interest rate drop, investments are poised for a significant transformation. The three prominent stocks in the technology sector have strategically maneuvered to capitalize on this impending financial shift. Each company showcases distinct strategies, from market positioning to technological innovations and financial projections. During this time, these stocks to buy now are all poised to skyrocket.
The first one, celebrated for its prowess in government technology solutions, has witnessed substantial revenue growth and contract wins in the defense sector. The second one, focusing on automation, has exhibited a surge in high-value customer acquisition and product innovation. Meanwhile, in its quest for growth, the third has embarked on market diversification and advanced collaborations.
This article delves into these companies’ key strategic moves, highlighting their growth trajectories amidst economic changes. Read more to understand their market adaptability and technological strides.
Palantir Technologies (PLTR) logo seen on billboard, known as Palantir is a public American company that specializes in big data analytics.
Source: Poetra.RH / Shutterstock.com
To begin with, Palantir’s (NYSE:PLTR) government segment growth and contract wins highlight its strategic positioning in the defense and governmental sectors. In Q3 2023, there will be a 12% year-over-year increase in government revenue, driven by rising demand for products that support global allies. The company has secured a substantial new contract worth up to $250 million over three years. This fundamental development signifies the company’s ability to win lucrative contracts in the defense and government sectors.
Fundamentally, this trend showcases Palantir’s relevance and value proposition in providing global allies with critical intelligence and defense capabilities. These leads strengthen its position as a key player in the government technology space. Specifically, the company’s strategic focus on supporting defense missions and alliances emphasizes its focus on capitalizing on impactful solutions in critical areas.
Looking forward, there is an expectation of reacceleration in United States government business beyond the current growth rate. These projections support Palantir’s financial performance. At the bottom line, the company’s performance showcases consistent growth in profitability. There is 17% year-over-year revenue growth, exceeding the high end of the guidance range. Achieving GAAP profitability for the fourth consecutive quarter and sustaining GAAP operating profitability on a trailing 12-month basis reflects the company’s ability to generate consistent profits.
Finally, Palantir’s strong cash flow generation signifies its ability to convert revenue into substantial cash reserves. Palantir generated $141 million in adjusted free cash flow in Q3, with a margin of 25%, accumulating $3.3 billion in cash and short-term U.S. Treasury bills. Therefore, these elevated liquidity levels provide ample resources for future investments, acquisitions, and growth initiatives. You can see why this one made our list of stocks to buy.
UiPath (PATH)
A magnifying glass zooms in on the website homepage of UiPath (PATH).
Source: dennizn / Shutterstock.com
At its fundamental core, UiPath (NYSE:PATH) experienced growth in the number of customers with $1 million or more in annual recurring revenue (ARR) (31% growth to 264 customers) and those with $100K or more in ARR in Q3 fiscal 2024. The customer expansion and segmentation highlight the company’s ability to attract and retain high-value customers, which is essential for sustained growth and revenue generation.
Notably, the fundamental relationship between the growth in high-value customers and the overall increase in ARR showcases the significance of upselling. Additionally, the availability of 70 solution accelerators in the marketplace and the broad-based strength of net new ARR across industries reflect UiPath’s focus on industry verticalization.
In dollar terms, UiPath reported a 24% increase in ARR based on customer traction and the attractiveness of UiPath’s automation platform. Critically, the relationship between ARR growth and revenue growth (both at 24%) indicates a balanced scaling strategy for effectively monetizing its customer base. Additionally, the notable improvement in non-GAAP operating margin by more than 6% to 13% reflects the company’s efficiency in managing costs while scaling its operations.
Finally, the company is launching innovative products like Autopilot, leveraging generative AI for various user segments. Also, UiPath is enhancing intelligent document processing with active learning and generative AI. Overall, these advancements enable the company to provide prolonged, cutting-edge solutions, improve the user experience, and expand the scope of automation capabilities. Of all the stocks to buy now we mentioned, this one stands above the rest.
Zebra (ZBRA)
A photo of the sign for Zebra Technologies (ZBRA) outside of a building.
Source: Michael Vi/ShutterStock.com
Under its optimization strategy, Zebra (NASDAQ:ZBRA) has reallocated resources to accelerate growth in underpenetrated markets such as Japan, government sectors, and manufacturing. This move indicates a strategic pivot towards diversified market segments. In detail, the company aims to capture the potential of new use cases leveraging radio frequency identification (RFID) and machine vision. Hence, this signals an effort to tap into emerging technologies and expand its market reach.
Fundamentally, Zebra’s resource reallocation moves suggest a deliberate shift in its market strategy, focusing on exploring growth opportunities in previously untapped regions and sectors. Therefore, this diversification strategy appears designed to mitigate the risks of reliance on specific markets and industries.
On the product side, Zebra introduced various products and solutions, including Zebra Pay and the Zebra Work Cloud Suite, expanding its product portfolio. Also, the collaboration with Qualcomm (NASDAQ:QCOM) focuses on generative AI technology for handheld mobile computers and tablets. The collaboration is a proactive approach to staying competitive by offering advanced and diversified technological solutions.
At the topline, Zebra witnessed a broad-based softening of demand across all its primary end markets, particularly in retail, e-commerce, and transportation logistics. Initially projected at $85 million, these actions are expected to yield $100 million in annualized savings.
Overall, the increase in projected annualized cost savings indicates Zebra’s proactive measures in cost management. Despite decreased gross margins, the company’s efforts to mitigate expenses reveal a focus on improving profitability ahead of the upcoming interest drop. If you are going to buy any of these stocks to buy now, start here.
As of this writing, Yiannis Zourmpanos held a long position in PLTR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.
