Zacks Investment Ideas offers highlights: Nu, Spotify and Palantir

For immediate release

Chicago, IL – August 21, 2024 – Today, Zacks Investment Ideas offers the highlights of Nu NU, Spotify SPOT and Palantir PLTR.

Rising Momentum: 3 Growth Stocks to Buy Now

The current market environment is unusually strong and provides fertile ground for growth stocks with compelling fundamentals. Stocks like Now, Spotify and Palantir is perfectly positioned to capitalize on this momentum.

These stocks not only boast impressive growth forecasts and strong momentum, but also hold Zacks’ top rank, further reinforcing their potential for continued outperformance. As these companies ride strong industry trends and demonstrate robust earnings growth, they present exciting opportunities for investors looking to tap into the next stage of this market rally.

Now a fintech stock is in high growth

Now one of the most exciting stocks on the market today, experiencing tremendous growth as a startup and successfully transitioning into a highly profitable company. Now a leading fintech company operating primarily in Latin America, with a strong presence in Brazil, Mexico and Colombia. It is best known for its digital banking platform, Nubank, which offers a wide range of financial services, including digital credit cards, personal loans and investment products.

The Nu stock is pushing new records this week on the heels of an impressive quarterly result. Sales in the quarter showed a 77% year-on-year (YoY) increase, demonstrating its exceptional growth rate. But even more impressive is its continued growth in profitability. In the chart below, we can see that over the past year, net margins have trended positively, which has contributed to investor interest in the stock.

Now also have one Zacks Rank #2 (Buy) rating reflecting upward earnings revisions.

What is particularly compelling about Nu is its valuation. Now that the company is showing regular profits, it enjoys a very reasonable price, especially for its growth estimates. NOW trades at a one-year forward earnings multiple of 35.2x and has earnings per share (EPS) growth forecasts of 51.8% annually over the next three to five years. That means it has a PEG ratio of just 0.68, which is a discount based on the metric.

Spotify stock rises on earnings revisions

Music streaming giant Spotify is another high-growth stock that continues to ride strongly on buying momentum. In the most recent quarterly meeting, Spotify shared that revenue grew 21% year over year, gross profit reached 29.2% and net new subscribers increased by 7 million, 1 million above estimates.

Spotify also has one Zacks Rank #1 (Strong Buy) rating reflecting upward earnings revisions. Analysts have unanimously raised earnings estimates across time frames. Earnings estimates for FY24 have been raised by 27.7% in the last two months and FY25 by 21.2% in the same period.

Today, Spotify has a one-year forward earnings multiple of 54.6x and a one-year forward sales multiple of 4x. Given that SPOT is growing its sales faster than most companies, I find it quite interesting that based on forward sales it is cheaper than the broad market.

Palantir is a top AI stock

Palantir is another high-growth stock that has delivered impressive returns and has a very promising outlook. In its quarterly report last Monday afternoon, Palantir posted a strong period that beat both top and bottom line estimates. Customer base grew 41% year-over-year, revenue grew 27%, and adjusted earnings per share (EPS) grew 80% year-over-year.

In addition, over the next two years, sales are expected to increase by over 20% annually, and EPS is expected to grow by 26.8% annually over the next three to five years. The company also boasts one Zacks Rank #2 (Buy) assessment.

Over the past month, analysts have unanimously raised earnings estimates by as much as 12.5%.

Palantir also has an advantageous position in artificial intelligence. Palantir’s Artificial Intelligence Platform (AIP) is designed to bring the power of AI to business operations, empowering organizations to rapidly make informed, data-driven decisions. AIP integrates machine learning (ML) and AI technologies with Palantir’s existing data platforms such as Foundry and Gotham, enabling seamless deployment of AI solutions at scale.

The platform enables users to build, train and deploy AI models using their data, making it easier to solve complex problems across industries. It emphasizes security, governance and interpretability, ensuring that AI-driven decisions are transparent and accountable. Palantir’s AIP is particularly strong in environments where data is sensitive, such as government, defense and critical industries.

In particular, AIP allows non-technical users to interact with AI models without needing deep technical expertise. This democratization of artificial intelligence can drive operational efficiency and unlock new opportunities across different sectors.

While Palantir enjoys strong growth rates and huge potential in artificial intelligence and enterprise software, investors have to pay up for the exposure. PLTR is currently trading at an unusually high relative valuation. At nearly 26x forward sales, Palantir is among the richest stocks of its size.

Final thoughts

In this strong market environment, growth stocks such as Nu, Spotify and Palantir present compelling opportunities for investors. Each of these companies has a clear path to continued growth, driven by strong industry trends and robust financial performance. With top Zacks ranks backing them, they demonstrate both momentum and resilience in their respective markets.

But while the potential for future gains is obvious, investors should also remain vigilant and prioritize risk management. Valuations, especially in high-growth stocks like Palantir, can appear stretched, and market corrections can happen unexpectedly. A balanced approach that combines confidence in these companies’ long-term prospects with careful timing and diversification can help investors navigate any bumps in the road ahead.

Why haven’t you looked at Zacks’ top stocks?

Since 2000, our best stock-picking strategies have blown away the S&P’s average gain of +7.0 per year. Amazingly, they increased with average gains on +44.9%, +48.4% and +55.2% per year.

Today you can access their live selections with no cost or obligation.

See Share-free >>

Media contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past results are no guarantee of future results. Inherent in any investment is the potential for loss. This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice or a recommendation to buy, sell or hold any security. No recommendations or advice are given as to whether an investment is suitable for a particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date herein and is subject to change without notice. Any views or opinions may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or securities asset management. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. For information on the performance numbers shown in this press release, visit https://www.zacks.com/performance.

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report