2 Potentially Explosive Stocks to Buy in November
Investing in companies that are developing world-changing technologies can yield life-changing returns. Here we’ll take a look at a company working on artificial intelligence (AI) software, and another company that’s making huge inroads into the electric vehicle market that could deliver huge returns in the long term.
1. Palantir Technologies
Palantir Technologies (belter 0.05%) He is a leading software developer who helps organizations analyze massive amounts of data to make better decisions. The stock has tripled from its lows last year, but the recent acceleration in revenue and earnings could bode well for investors in 2024.
Like many other technology companies, Palantir saw revenue growth slow earlier this year amid macroeconomic headwinds. What seems to be holding the stock back more than anything else is weak profitability. But in early May, the stock took off after Palantir said it expected to be profitable every quarter through the end of the year, and it hasn’t looked back.
Revenue accelerated in the third quarter, up 17% year over year. Palantir has become faster at converting new customers, and the number of users on its AI platform has nearly tripled. It’s also achieving this growth while still dealing with uncertainty in the economy, but it also expects accelerated growth from its US government business, which is a catalyst.
The increased demand for its software platforms is driving a significant increase in profits, with net income up 157% compared to the previous quarter. Strong momentum in customer demand could drive earnings and fuel the stock’s upside in 2024 and beyond.
2. Rivian Cars
Rivian Cars (Raven 2.01%) It is one of the leading companies in the electric vehicle industry that is experiencing tremendous growth. While it offers two truck models for the consumer market, its claim to fame is supplying thousands of commercial delivery trucks Amazon. The stock fell, as investors remain skeptical about whether the company can grow revenue profitably over the long term. But there are good reasons to believe it will happen, which could lead to huge gains over the next few years.
Rivian’s quarterly vehicle production rose rapidly, growing from 1,003 in 2021 to 16,304 last quarter. Revenue is growing along with increased production, but the company also reported a massive loss from operations of $1.4 billion on just $1.3 billion in revenue in the third quarter.
However, management is taking strides to cut costs. Losses narrowed from more than $1.7 billion in the same quarter last year, with gross profit per unit increasing every quarter this year. Management expects new technologies to further reduce production costs.
A major catalyst for growth is the recent announcement that Rivian will sell its commercial trucks to other companies outside of Amazon. That’s great news, but it’s also worth noting that the e-commerce giant is the company’s largest shareholder, with a $3.8 billion stake at the end of the third quarter. Amazon’s investment is a major vote of confidence in the future value of Rivian’s business. It could succeed in becoming one of the best electric car makers in the world, and that could lead to huge gains for shareholders in the coming years.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard holds positions at Amazon and Rivian Automotive. The Motley Fool has positions in and recommends Amazon and Palantir Technologies. The Motley Fool has a disclosure policy.