The U.S. stock market has seen significant volatility in the past few years, swinging sharply between bull and bear phases. In an uncertain market environment, it becomes essential for retail investors to find stocks that can grow in bull markets and demonstrate stability in bear markets.
Online trading platforms also play a key role in making investing more accessible to a larger audience. By doing away with deposit requirements and high fees, these brokerages have made it possible for people with limited budgets to invest meaningfully in the stock market.
Even if you have just $300 in extra cash set aside for investing, you can make smart buys, including these two stocks.
Palantir
The first stock you should consider adding to your portfolio is data mining and artificial intelligence (AI) specialist Palantir Technologies (NYSE: PLTR) . Known for helping clients derive insights from huge and complex datasets, the company's data mining capabilities have been further strengthened by its recently launched Artificial Intelligence Platform (AIP).
Management has noted that while some of its competitors may claim "only 10% of my customers have data that's even AI-ready to begin with," AIP is able to analyze unstructured data from various sources such as emails, Slack messages, PDFs, text messages, and images.
Palantir's U.S. commercial business is seeing rapid growth, driven mainly by the increasing adoption of AIP by existing and new customers. The company's U.S. commercial revenues grew 40% year over year to $149.7 million in the first quarter as its U.S. commercial customer count rose 69% to 262.
Growth for the company's core U.S. government business has also started reaccelerating with revenue up 8% year over year (versus 3% in the previous quarter). The company secured a $178.4 million direct contract from the U.S. Army, under the Tactical Intelligence Targeting Access Node (TITAN) program. Being a "software prime" -- or the first software company to have a direct contract with the U.S. army for a hardware project -- Palantir is poised to capture multiple new opportunities in the defense sector.
Analysts expect Palantir's revenue to grow at a compound annual growth rate of 21.5%, from $2.23 billion last year to $5.87 billion in 2028. Considering the multiple catalysts driving this healthy growth projection, Palantir is an easy choice for a long-term investment.
Confluent
The second no-brainer stock that makes for an exceptional buy is cloud-native data streaming platform provider Confluent (NASDAQ: CFLT) . The company enables clients to process and analyze data streams across hundreds of custom, operational, and analytical applications to derive valuable, real-time insights.
Confluent was co-founded by the creators of the open-source platform Apache Kafka. The company offers an on-premise solution called Confluent Platform and a fully managed cloud-native solution called Confluent Cloud. The latter has become the fastest-growing offering for the company and now accounts for a majority of its subscription revenues.
Confluent Cloud is expected to continue growing as it increasingly attracts enterprise customers away from the more cumbersome and difficult-to-operate Kafka platform. The company's shift in its go-to-market strategy for its cloud business, from an upfront commitment to a consumption-based model, is also bearing fruit. Confluent added 160 clients in the first quarter and ended the period with a total of 5,120 customers.
The company is also expanding its product portfolio to include data streaming products (DSPs) such as Connect, Process, and Govern. These DSPs accounted for nearly 10% of the company's first-quarter cloud revenue, and they're growing even faster than the overall cloud business. Customers using three or more of these products (from the customer cohort contributing over $100,000 annually) grew 47% year over year in the first quarter. This multi-product strategy is helping the company benefit from network effects and build a sticky customer base. Subsequently, the company is well-positioned to capture a significant share of the data streaming market, estimated to be worth $100 billion by 2025.
The general availability of Apache Flink (a data stream processing service obtained through the acquisition of Immerok) in the first quarter is expected to add another major revenue stream for Confluent. The company's data streaming platform is also playing a critical role in providing real-time, contextual, and trustworthy data from multiple business systems and transforming it into the formats required for AI and machine learning workloads.
Confluent is not yet profitable on a generally accepted accounting principles (GAAP) basis. However, the company is guiding for a break-even non-GAAP operating margin and break-even free-cash-flow margin in full-year 2024. The company has a strong balance sheet as well with $1.91 billion in cash and marketable securities, allowing it to continue investing in growth initiatives.
Finally, Confluent is now cheaper on a price-to-sales (P/S) basis than it has been in the past. Its P/S ratio of 9.8 is almost half its three-year average multiple of 18.4, further adding to the stock's appeal.
Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Confluent and Palantir Technologies. The Motley Fool has a disclosure policy .
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