There's a good chance your portfolio has been moving higher in recent weeks, but not every stock is going along for the ride. Roughly 20% of stocks are trading lower over the past month. You probably own some of them, and you may want to consider adding to them now or picking up some of the names on sale that you don't own.
Palantir Technologies (PLTR 4.30%), Sirius XM Radio (SIRI +0.00%), and Starbucks (SBUX 0.59%) are some of the stocks trading lower over the past month. I like them. They're on the sales rack, and I think they present some of the top market opportunities right now.
NASDAQ: PLTR
Key Data Points
1. Palantir Technologies
Shares of Palantir have slipped 4% over the past month and are now trading more than 21% lower than the 52-week high they scored in November. Investors were riding high after Palantir delivered a "beat and raise" performance, but there have been some cautious notes lately from a few Wall Street firms.
Let's start with the positive. The third-quarter report by the software builder for the intelligence community was well received. Revenue rose a better-than-expected 17% to $558.2 million. A 33% increase in its U.S. commercial sector business was particularly noteworthy, even though that segment accounts for just a fifth of the top-line mix right now. Its reported profit reversed a prior-year loss, and its adjusted profit also topped Wall Street profit targets.
Image source: Getty Images.
The stock shot higher in early November following the strong report, but it's been drifting lower since then. The first step down came later in November, after it led a successful group of partners in securing a contract with the United Kingdom National Health Service, which said it will roll out a new software platform. Usually investors cheer when a bid is successful, but a couple of analysts noted that the amount of the deal they expected Palantir to win was less than what they were projecting.
The hesitant analyst news didn't end there. Louie DiPalma at William Blair suggested that a U.S. Army contract renewal due later this month could be lower than the original $458 million deal. But winning even a small contract is better than losing it to somebody else. Palantir, after all, is a respected player in its core specialties. Revenue is decelerating for the third year in a row, but top-line gains in the high teens is still solid. It was losing money when it was growing faster, but now it's consistently profitable.
NASDAQ: SIRI
Key Data Points
2. Sirius XM Radio
When it comes to reopening plays, Sirius XM would seem like a natural. We're spending more time in our cars as we get called back in to work, refresh our travel plans, and drive out to visit friends or attend social events. Dropping gas prices can only help. However, the satellite radio monopoly's shares are trading 1% lower over the past month, down 23% over the past year.
Revenue growth is flat right now, but that's not unusual. Back out the Pandora acquisition in 2019, and organic revenue gains have been in the single digits since 2015. However, Sirius XM has been a beat in returning money to its shareholders since turning profitable a dozen years ago. Its 2.3% dividend is decent, and its payouts have increased every year since initiating a payout policy in 2016. Sirius XM has also been voracious in buying its own stock, reducing its share count by 43% since its peak a decade ago. There are challenges to the model in a world of connected cars, but Sirius XM keeps growing its subscriber base with its premium service.
NASDAQ: SBUX
Key Data Points
3. Starbucks
Along the same lines as Sirius XM, with a lot more latte and a lot less Howard Stern, Starbucks is also trading lower over the past month and year. The baron of baristas has fallen 7% over the last month and 5% over the past year.
The return to in-office work is a clear trend this year, and Starbucks is made for morning commutes and midday office runs. So even if Starbucks is trading lower, you can't blame the business. It closed off fiscal 2023 in fashion, with a 12% increase in North American revenue in its latest quarter and a 40% surge in operating profit. Stateside comps for the entire fiscal year were up an encouraging 8%.
Starbucks is never going to be a cheap stock, but at 23 times this new fiscal year's profit target and less than 20 times next year's analyst forecast, it's a historical bargain.
