Over the course of 2007 to 2021, growth stocks dramatically outperformed value stocks. Historically low interest rates, coupled with the emergence of the knowledge economy, sparked one of the longest bull markets in growth stocks in history.
Nonetheless, value stocks took center stage last year in response to rising interest rates and geopolitical turmoil. This pronounced value tilt sent growth-stock valuations tumbling almost across the board. This year, pure-play growth equities have rebounded to a degree, due to the excitement over artificial intelligence (AI), but bargains still abound in the space.
Two growth stocks that deserve a closer look are Intellia Therapeutics (NTLA 3.70%) and Palantir Technologies (PLTR 3.73%). Intellia Therapeutics is one of the early leaders in the emerging field of genomic medicine. Palantir is a software powerhouse that specializes in data analysis and intelligence solutions.
Both companies have unique competitive advantages, high growth opportunities, and underappreciated intangible assets. Here's a brief overview of each one.
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Intellia Therapeutics: A pure-play gene editing stock
Intellia Therapeutics is a pioneer in the field of CRISPR/Cas9 gene-edited therapeutics. CRISPR/Cas9 is a revolutionary tool that can cut and edit DNA, allowing for the correction, deletion, insertion, or disruption of disease-causing genes. The company's novel platform has the potential to create functional cures for scores of genetically based diseases.
Intellia Therapeutics' most advanced clinical candidates are NTLA-2001 for transthyretin (ATTR) amyloidosis and NTLA-2002 (wholly owned) for hereditary angioedema (HAE). NTLA-2001 is being developed through a collaboration with Regeneron Pharmaceuticals.
The biotech plans to advance NTLA-2001 into a pivotal-stage trial soon, depending on regulatory feedback. NTLA-2002, on the other hand, is on track to enter a pivotal trial in the third quarter of 2024.
Wall Street analysts think these two clinical assets could push the company's shares northward by a whopping 173% over the next 12 months. While this price target might seem unrealistic at first glance, there are two solid reasons behind it. First, Intellia Therapeutics' stock is trading below 3x cash on hand, which is a fairly cheap valuation for a cutting-edge genomic medicine stock.
Second, NTLA-2001 and NTLA-2002 are targeting markets worth $15 billion per year in combined sales. As potential best-in-class therapies for ATTR amyloidosis and HAE, each therapy has a realistic path to over $1 billion in annual sales. Intellia Therapeutics' bulls, in effect, think the biotech's stock is markedly undervalued right now.
In the long term, Intellia Therapeutics stock could be a genuine wealth builder. The company's early and pre-clinical pipeline assets may be unproven at the moment, but these compounds could radically alter the treatment paradigm for a range of high-value indications in both cancer and rare diseases.
Palantir Technologies: A top artificial intelligence stock
Palantir Technologies is a software company that specializes in developing and deploying AI-enabled platforms for data analysis and decision-making. The company has two main revenue generators:
- Gotham: An AI-ready operating system that helps government agencies to integrate, manage, and secure large data sets in real time.
- Palantir Foundry: A multilayered modeling system that enables organizations to automate and optimize workflows.
Earlier this year, Palantir Technologies launched its next-generation offering, the Artificial Intelligence Platform, or AIP for short, designed for both business and military applications. AIP combines machine learning with large language models to analyze complex data sets. Thanks, in part, to the excitement over AIP's rollout, Palantir Technologies stock has surged by a whopping 178% this year.
Why is Palantir Technologies stock worth buying and holding for the long term? At nearly 15x projected sales, the software company's shares aren't cheap. However, its long-term opportunity in AI is enormous.
Palantir Technologies is well-positioned to benefit from the AI boom as more and more businesses and organizations seek to leverage the tech to enhance performance, innovation, and problem-solving capabilities. This powerful AI trend should provide a strong tailwind for the stock in the long run, making it an attractive buy-and-hold play.
