Palantir Technologies Inc – Holds significant growth potential.

Palantir Technologies Inc (NYSE: PLTR) is a software entity that provides enterprise data platforms for businesses dealing with complex and sensitive data. It serves organisations across private, public, and non-profit sectors.

Investment Rationale – Buy at USD 26.92

• From a technical standpoint, 20-day SMA (24.84) seems favourable and supporting an upside potential.
• Over the past two years (FY18 to FY20), revenue and gross profit have surged at a CAGR of ~35.47% and ~31.19%, respectively.
• The Company has invested heavily in developing Apollo and continued investment in building product infrastructure platform, which shall strengthen the Company’s capabilities.
• PLTR is also pursuing new ways of customer acquisitions and seeking partnerships to expand the business.

Risk Assessments

• Since its inception, the Company has generated a negative cash flow from operations.
• The Covid-19 disruption can also harm the supply chain and customer demand.
• Volatility in the financial market could also impact the Company’s ability to raise external funds.

Recent News

11 March 2021: Palantir Technologies announced a six-year partnership with Faurecia to accelerate its digital transformation and enhance the use of artificial intelligence.

Financial Highlights for the fiscal year ended 31 December 2020 (26 February 2021)

 (Source: Company Website)

• During FY20, revenue surged 47% year-on-year as the revenues from government customers increased by 77% against FY19.
• Due to the increase in the personnel cost, the cost of revenues also increased by 45% year-on-year.
• During FY20, PLTR’s platform was used by 139 customers.

Year Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

During FY20, PLTR delivered stellar growth in revenues and gross profit. The Group has now built two software platforms, Palantir Foundry and Palantir Gotham, which can handle complexities in the world. The Company is also looking forward to expanding across sectors and within organisations, which holds the potential for bright prospects. It is also pursuing channel-selling opportunities with prospective customers. Stock 52 week High and Low were USD 45.00 and USD 8.90, respectively.

Based on solid operational performance, industry prospects and support from the valuation as done using the above method, we have given a “Buy” stance on Palantir Technologies Inc at the closing price of USD 26.92 (as on 12 March 2021), with single digit upside potential based on 36.00x EV/NTM Sales (approx.) on FY21E Sales (approx.).

Beam Global – All-set to deliver the planned growth in future.

Beam Global (NASDAQ: BEEM) develops patented infrastructure products and regarded as a CleanTech leader for the electrification of transportation.

Investment Rationale – Speculative Buy at USD 48.15

• From a technical standpoint, 20-day SMA (44.53) is supporting an upside potential.
• Following the public offering, the Company is prepared for the planned growth with a robust cash position.
• It has received contracts from the Federal Government and won several new contracts in FY20.
• The Company is likely to get benefit from the rapid demand for highly scalable EV charging infrastructure.

Risk Assessments

• The Company has a short operating history which makes it difficult to evaluate prospects.
• It faces intense competition while the Company is exposed to a rapid change in technology.
• The Covid-19 pandemic can result in the delay of contracts, and thus, it can impact the cash flows.

Recent News

23 November 2020: BEEM announced the pricing of a US$7.5 million bought deal offering, whereby the Group entered into an underwriting agreement with Maxim Group LLC.

FY20 Update for the quarter ended 30 September 2020 (as on 12 November 2020)

 (Source: Company Website)

• At the time of update, the Company held a working capital of nearly US$14.0 million, which was sufficient to manage the multi-years of operations.
• As of 30 September 2020, BEEM had cash of US$12,332,224, which increased year-on-year with proceeds of US$10.5 million from a public offering.
• The revenues for Q3 FY20 declined due to delays in the receipt of orders with Covid-19 challenges.
• The gross loss for the quarter was US$188,732, as compared to the gross profit of US$340,836 in Q3 FY19, primarily due to the decreased revenues.

One Year Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

BEEM has the ability to invent and manufacture renewably energized products to tap the dramatic demand EV charging infrastructure. In October 2020, it also signed a partnership with the City of San Diego to deploy EV ARCTM solar-powered EV charging terminals. Overall, the Group has the ability to benefit from the industry trends, and substantial cash reserves to pursue market opportunities. Stock 52 week High and Low were USD 75.90 and USD 6.10, respectively.

Based on solid operational performance, industry prospects and support from the valuation as done using the above method, we have given a “Speculative Buy” stance on Beam Global at the closing price of USD 48.15 (as on 12 March 2021), with single digit upside potential based on 24.66x EV/NTM Sales (approx.) on FY21E Sales (approx.). 

*All forecasted figures and Peer Information have been taken from Refinitiv, Thomson Reuters.

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