Tech company Palantir Technologies Inc (NYSE:PLTR) has been one of the hottest new issues of the past year, rising more than 200% since its shares first began trading on the NYSE on Sept. 30, 2020. Palantir helps provide software solutions for counterterrorism investigations and helps companies to better analyze, manage, secure, and understand their data.
Palantir released its fourth-quarters earnings last week where it reported better-than-expected revenue of $322 million but a loss of $0.08 per share, which was worse than what Wall Street was looking for. During the quarter, Palantir closed contracts with many big-name organizations including the U.S. Army and the Food and Drug Administration.
As companies look to get more efficient and get by on fewer resources as a result of challenges caused by the coronavirus pandemic, analyzing and managing data is going to be more important than ever. And that’s why Palantir may continue to do well for the foreseeable future. Next quarter, the company expects to see its sales rise by 45% year over year.
However, despite the growth potential, Palantir’s stock may be a tad too expensive to buy right now. Trading at a price-to-sales ratio of around 30, it is much more expensive than Adobe, which trades at just 18 times its sales. Adobe is another tech stock that provides data analysis services but it also has a more diverse product mix that makes it a safer overall buy.
Although Palantir has come down from its 52-week high of $45, investors may be better off waiting for more of a drop in price before buying the company’s shares.