What do a leading data analytics company and a licensed cannabis producer have in common?

Although not much can be found at a mere glance, dig deeper and you will find two growth stocks riding solid structural trends. The companies in question are Palantir (PLTR 1.40%) and OrganiGram Holdings (OGI 1.11%). Luckily, these companies are trading significantly below their all-time highs, mainly due to investors rotating out of growth picks into value stocks since mid-February.

That has opened up an attractive entry opportunity for those with $1,000 to invest. An investment in these two unstoppable stocks may return attractive gains in the coming years.

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1. Palantir

Founded in 2003, Palantir provides data analytics and artificial intelligence tools to government and commercial customers. The company operates two software platforms: Gotham, used mainly by government agencies, and Foundry, used by commercial organizations. Although the company's share price is down by over 35% from its all-time high, mainly due to the tech sell-off, it is still up over 165% above its first-day closing price.

Palantir differentiates itself from other data analytics companies based on its solid track record of analyzing, integrating, and visualizing huge amounts of data for U.S. intelligence agencies without ever compromising security. In a world where industries are leveraging data and artificial intelligence to optimize costs and cyber incidents have become a leading business risk, secure data analytics solutions are the need of the hour.

The market trusts Palantir, and this is evident from the company's many partnerships. Palantir has signed multiyear contracts with big government players such as the Space Force, U.S. Army Research Lab, National and Nuclear Security Administration, and with large private organizations such as Faurecia, IBM (IBM 0.13%), and 3M (MMM 0.16%). At the end of 2020, the company had contracted deals with a total value of $2.8 billion and a dollar-weighted average contract duration of 3.6 years.

In fiscal year 2020, government customers accounted for almost 56% of Palantir's total revenues. Deals with government agencies are usually for longer tenures. This sticky customer base ensures higher revenue visibility and low top-line volatility. While the government customers entered shorter contracts with the company in 2020, many of them are expected to renew and expand their contracts in the coming months. This could prove to be a major growth driver for Palantir.

Palantir's revenues rose by a solid 47% year over year to $1.1 billion in fiscal 2020 (ended Dec. 31, 2020). Yet there is still significant room to grow considering that the company is targeting an addressable market worth $119 billion, of which $63 billion is in the government sector and $56 billion is in the commercial sector. The company is not yet profitable (it had a fiscal 2020 loss of $1.2 billion), which is understandable considering that it is heavily investing in growth initiatives. The positive, however, is that Palantir has a cash balance of over $2 billion on its balance sheet, which is sufficient to meet its funding needs for several years.

Palantir is trading at over 27 times sales, which is quite expensive. However, seasoned investors understand that these valuations are not unusual for high-growth companies. Besides, the strategy of rapidly creating value by prioritizing growth over profits has proved successful for many companies, such as Amazon (AMZN -0.17%) and Netflix (NFLX 1.74%). Against this backdrop, patient investors can manage to earn handsome returns from Palantir, even if they choose to buy at these elevated prices.

2. OrganiGram

Canada-based OrganiGram emerged as a favorite of Reddit retail investors in early February. While that momentum seems to have dissipated, the company still has many redeeming qualities that can make it an attractive long-term pick.

OrganiGram has been revitalizing its product portfolio organically and through acquisitions to strengthen its position in the highly competitive Canadian cannabis space. Although launching many new products in a short time has driven up the company's costs, it also means more options to choose from for customers.

Some of OrganiGram's products are already in high demand, most likely due to their quality. Edison brand, which covers several cannabis products, such as dried flower, cannabis pods, and cannabis-infused chocolates, was one of the most searched brands on the Ontario Cannabis Store (OCS) website in November 2020. The recently launched dried flower brand, SHRED, was the most searched brand on the OCS website in November and December 2020.

OrganiGram is also focusing on ramping up production and staffing, which is expected to reduce supply-side constraints and create efficiencies of scale. The company has been quite successful in adjusting production levels with market conditions at its single indoor operating facility in New Brunswick. Additionally, the company now has a second operating facility in Manitoba, obtained through the acquisition of soft chew manufacturer Edibles & Infusions Corporation (EIC).

With its broad product portfolio comprising several high-quality brands, OrganiGram can prevent customers from switching to competitor products. This sticky customer base can help increase revenue visibility and reduce top-line volatility in the long run.

British American Tobacco's (BTI -0.36%) CA$221 million ($175 million) cash investment for a 19.9% equity stake in OrganiGram has also strengthened the latter's balance sheet. OrganiGram plans to deploy this capital to invest in international markets, including the U.S. The two companies have also entered a strategic collaboration to develop next-generation recreational cannabis products, with an initial focus on products with improved cannabidiol (CBD) delivery.

However, investing in OrganiGram is not without risks. The company's net revenues crashed 23% year over year to CA$19.3 million in the first quarter, while net losses reached CA$34.3 million, which is a significant deterioration from the CA$0.9 million loss in the prior-year quarter. The company has also significantly diluted its stock to pay down debt and finance acquisitions.

OrganiGram is a young and small-cap company focused on the high-margin branded cannabis derivatives space in Canada. This coupled with the possible legalization of cannabis in the U.S. at the federal level has significantly improved the risk-reward proposition of this stock.