You don't need to be loaded to load up on growth stocks. In an era of rock-bottom trading commissions and the ability to pick up fractional shares, a universe of growth stocks is available even if you have just $500 to put to work.
Palantir Technologies (PLTR 1.00%) and Norwegian Cruise Line (NCLH 0.97%) are two stocks that have been big winners since the start of last year. However, both stocks have pulled back lately. Are they screaming buys right now? Let's take a closer look.
1. Palantir
Some stocks don't seem cheap at first glance. Palantir has more than tripled since the start of last year, but the shares have tumbled 24% since peaking two months ago. The software developer for the intelligence community tripped up its investors earlier this month by giving problematic guidance after an otherwise strong quarter.
Things aren't as bad as the recent downticks suggest. The midpoint of its new top-line outlook calls for 22% growth in the current quarter, accelerating from the better-than-expected 21% increase it just posted in the first week of May. Its full-year guidance has revenue growing by just better than 20%, a welcome bump from the 17% it scored last year. Analysts may have been holding out for more, but it doesn't mean that Palantir's fundamentals aren't getting better with every passing financial update.
Image source: Getty Images.
Palantir's surge is easy to explain. The market has rallied behind companies with legitimate artificial intelligence (AI) angles, and Palantir fits the bill. Palantir has been a leader in AI, data science, and machine learning before those buzzwords turned heads on Wall Street. Its decision-centric platform integrates AI with enterprise data, logic, and action.
It also doesn't hurt that the popularity of AI leaders comes at a time when Palantir's business itself has become more sustainable. It has posted reported profitability for six consecutive quarters. It's also no longer just at the mercy of government contracts, growing its appeal to private businesses. Commercial revenue is growing a lot faster than its work in the public sector.
Naysayers will argue that Palantir is overpriced at 64 times this year's projected earnings and 54 times next year's target. It's a not a cheap stock, but it has gotten cheaper this month. If you think you missed out on Palantir by not buying the stock when it was in the single digits in the springtime of last year, its May correction may be a chance to consider the more proven business at a higher price.
2. Norwegian Cruise Line
Last year was a great time to own cruise line stocks, but 2024 has been a bit more challenging for Norwegian Cruise Line shareholders. The stock is trading 20% lower this year, but it doesn't seem fair.
Dismissing Norwegian right now seems to be a mistake. The industry has never been better, shattering pre-pandemic records. All of the major cruise line operators are posting record bookings and customer deposits. As the distant bronze medalist Norwegian doesn't get the same kind of love in the investing community as its larger peers, but that could be a mistake.
Yes, Norwegian shares took a hit four weeks ago when it posted mixed quarterly results. This is also the same company that bounced back with a rosier outlook at last week's 2024 Investor Day presentation. May began with Norwegian boosting its adjusted earnings-per-share guidance from $1.23 to $1.32. Last week it jacked up that forecast to $1.42 a share. The stock exits the Memorial Day holiday weekend at $16, trading 15% lower in a month that has seen it bump its bottom-line guidance higher not just once, but twice.
Norwegian was trading for 15.4 times the adjusted profit of $1.23 a share it was eyeing at the end of April. Now it's fetching a multiple of just 11.3 times the $1.42 a share it is now modeling for the bottom line. Does this seem right?
Business should only get better from here, and the bargain will be even more apparent. The country's third-largest cruise line operator is trading for just 8.9 times the $1.80 a share that analysts are forecasting for next year. If you care to look deeper into the ocean waters, Norwegian initiated a 2026 profit target of $2.45 a share in last week's investor update. This drops the adjusted net income ratio to a mere 6.5 for 2026.
Between Palantir -- a dynamic AI-fueled business that has recently corrected -- and the head-scratching deep value of Norwegian these are my two screaming buys right now. It's OK to dream big even with an investment that is small.
