Palantir: Sell Puts For A Great Yield And A Potentially Better Entry Into This High Flyer
Summary
- Palantir's stock has surged 77% since our 'Strong Buy' recommendation, but its current valuation - at 33x sales - looks extended.
- Despite strong financial and operational performance, including ~30% revenue growth and improving margins, the stock's price is way ahead of underlying financial results.
- As a result, we're soft-downgrading the stock to a 'Buy' from a 'Strong Buy' in light of the extended multiple.
- We recommend selling put options on PLTR to balance risk and reward, offering a 12% annualized yield and potential assignment of the stock at a material discount to the market.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in PLTR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.