Please forgive, I tagged this under NVDA only because there is no tag for PLTR and I have no idea how to create one (NVDA like PLTR is basically in the AI category, so…); I may not have permission to do so, as I seem not to have for many boards.
I sold all my PLTR recently in my Roth at a nice gain, but want to watch the stock to get back in at some point. Then I saw the above article. Says PEG is attractive. Quote:
" Applying the more appropriate forward [price/earnings-to-growth (PEG) ratio] – which takes into account Palantir’s accelerating growth rate – returns a multiple of 0.37, with any number less than 1 being the standard for an undervalued stock."
I’m curious if that is accurate. Seeking Alpha has a different PEG. Yahoo finance has something different. (Both more expensive)
Thanks for any info (would like to know the data being used in the article if available)
PLTR might be between the Peak of Inflated Expectations and the Trough of Disillusionment
I bought too early, sold at a loss, bough to create income with covered calls. It’s a good company but valuation and stock price don’t march in lockstep.
I don’t pay much attention to “data.” I try to understand the business.
He assumes that the growth will accelerate. So his PEG can be whatever number he wants it to be. Unfortunately the analyst see Revenue decreasing so who will be right? The future is hard to see but if I was to say anything about this PEG of .37 I would say the farther the stock price falls the closer to right he gets.
When you say he can use whatever number he wants (and I agree, as the drop continues, at some point it will be correct), let me ask about the nuance of a forward P/E/G. If I want to do a year’s worth, that would be P/E divided by expected forward growth rate for the next twelve months. But, if I want to do 5-year, just to be 100% certain I am on the same page, would this be the total growth from one to five years (at the end), or average growth rate per year for those five years? In other words, if earnings are expected to be 1 in year one, and then 3 in year 5, would that be P/E/200, or P/E divided by 25% per year (if that is calculated correctly, I asked Co-pilot). I believe it is the latter, but to be sure I am correct, just want to ask, as I do a deeper dive into expected growth rates for PLTR.
To Captain:
I agree, I think this is going to prove to be a great stock, and a very good business. Thank you for that chart, because lately this is what I am trying to understand…exactly how should we look at the cycle of appreciation of growth stocks that rise fast. What are the buy/sell rules for stocks that clearly are mispriced to the upside? PLTR is fairly scary because, as just one example, Fool contributor Parkev T who does those great videos recently took a DCF guess on fair price at $18. Even if that is way off, the stock is currently way off as well from $18. It makes one wonder exactly how to trade the stock, although the mention of calls seems to be a good approach.
If you were calculating a 200 percent growth over 5 years, and you only wanted to know what it would be in the 5th year, I would go with the 200 percent. But in order to get the P/E you are going to also guess what the Price at that time will be. That would be the real wild card. With growth companies it is hard enough to try to guess out 1 year.
Conversely, i think most investors would use what they consider a fair PE for that growth rate. (I would use 30, double the S&P 500 median.). And then use those numbers to arrive at a target price.
I think most investors wouldn’t even try to calculate it. There are two many variables that make any guess highly questionable. But I understand that it can be helpful to at least try. But be aware, nobody is going to get it right. They couldn’t even get NVDA correct.
What is the value of a target price? It is merely an estimate of what is fair value for a stock. Not cast in concrete. Not expected to be accurate. Merely a guide.
