Understanding stock prices can be challenging due to their short-term volatility. However, growth investing becomes straightforward when adopting a long-term perspective. Companies that consistently increase their annual revenues at high double-digit percentages can substantially reward shareholders. The key is to invest early and maintain that investment over time.
Here are two smaller, rapidly growing companies that, despite some short-term price fluctuations, have promising long-term prospects.
1. Palantir Technologies
Palantir Technologies is a leading name in the artificial intelligence (AI) sector, developing AI-driven software applications for various purposes. The company is notably recognized for its collaborations with the U.S. government, aiding military and intelligence agencies in making informed decisions. While facing mixed industry results due to macroeconomic challenges, Palantir’s AI platform is seeing increased demand, particularly from U.S. businesses. In the recent quarter, its revenue jumped by 27% year-over-year, with U.S. commercial sales soaring 55%.
Palantir is strategically poised to capitalize on the growing enterprise interest in AI while emphasizing data security. Its government collaborations are pivotal for its expansion, showcasing the importance of secure data handling. The company’s “boot camps,” which allow potential clients to experiment with its products before formal agreements, have been crucial in accelerating deal closures, providing a competitive edge. Over the past four years, Palantir’s U.S. commercial clientele has expanded from 14 to 295. With its share price up by 124% this year and the AI market predicted to grow significantly, Palantir could yield impressive returns.
2. Monday.com
Monday.com offers a cloud-based software platform designed to streamline project and team workflows. Over the past three years, its revenue has surged by 280%, reaching $844 million. Despite a competitive work management software market, Monday.com maintains strong service demand, even with price hikes. Its revenue increased by 34% in the latest quarter, with expectations for further growth as only 40% of customers have transitioned to the new pricing model.
Looking ahead, Monday.com anticipates continued robust customer adoption, having expanded its platform to include product development, customer relationship management, and services. During their earnings call, it was highlighted that their largest customer had significantly increased their usage, underscoring the platform’s value. Additionally, the introduction of generative AI features in Q2 enhances the platform’s appeal, offering productivity-boosting capabilities for organizations. With the stock price up 60% over the past year, Monday.com is positioned for potential substantial growth within a $101 billion market.
Investor Consideration:
Before investing in Palantir Technologies, it’s worth noting that The Motley Fool Stock Advisor team recently identified ten stocks they believe are the best buys now, and Palantir didn’t make the list. Historically, their recommendations have outperformed the market, with an average return of 765% compared to the S&P 500’s 165%. It might be beneficial to explore this top 10 list for potential investment opportunities.
Summary
This text explores the long-term growth potential of two companies: Palantir Technologies and Monday.com. Despite short-term stock price fluctuations, both companies show strong prospects for future growth due to increasing demand for their AI and cloud-based solutions. Palantir is gaining traction with U.S. businesses and government contracts, while Monday.com expands its platform offerings and sees robust customer adoption. Investors are encouraged to consider these stocks for long-term gains, though they should also explore other high-performing stocks recommended by experts.
