PLTR, SOFI & RKLB, a veteran's Long-Term Bet. Follow?
Stephen Guilfoyle is going long.
With the football season kicked off last week, TheStreet Pro contributor and veteran investor is looking beyond the gridiron to the world of investing.
Who is Guilfoyle?
Before proceeding further, you must be wondering who is Mr Stephen Guilfoyle? Me too.
A quick Google:
He is the founder and President of Sarge986 LLC, a family run trading operation.
An NYSE floor trader for over 30 years, Guilfoyle has served as:
Chief Market Economist for Stuart Frankel & Co.
US Economist for Meridian Equity Partners.
Vice President in Block Trading and Investment Banking with Credit Suisse over the years.
In short, this fella has some chops when it comes to investing in US market.
Long Term Investments.
Guilfoyle recently shared his thoughts about going long on 3 US stocks.
By his definition, it means “like passing on to the next generation long”.
On Fri, 06 Sep 2024 - he wrote:
These are long-term investments that I believe have a chance to have an outsized positive impact in the future.
The investments may be for me, but more than likely, these investments are for my children and for Guilfoyles, I have not even met yet.
This has been a kind of queasy time for US market, with Bespoke Investment Group noting that this year’s September did not start well.
The “September” Curse.
First week of September 2024, ranks as the worst first week for the S&P 500 index, on record.
Before 2024, year, the record for worst start to September was 2001, with other years being 1987, 2008, and 2015.
Using a basketball analogy, Bespoke said "these years are to bulls what the Detroit Pistons were to the rest of the NBA in the late 1980s and early 1990s."
Meaning:
US market is trying to figure out, just how hard or soft this landing is going to be.
Markets are also trying to figure out if the Fed would kick off their brand new and easier brand of monetary policy on 18 Sep 2024, with a small (25 basis point) or large (50 basis point) short-term rate cut.
Guilfoyle pointed that that he's "been accumulating below 3 US stocks, on weakness, for quite some time.
They are:
Let’s take a look on why Mr Guilfoyle is so convinced about them.
Palantir Technologies.
On Fri, 06 Sep 2024, CNBC broke news that PLTR was set to join the S&P 500 index, on Mon, 23 Sep 2024. (see below)
The data-analytics company, that has been trading publicly for only 4 years (since 30 Sep 2020) - surged on inclusion news in the S&P 500 index.
In the past 12 months, PLTR has added > $35 billion in market value and will be displacing stalwart $American Airlines(AAL)$ in the S&P 500 lineup.
It helped too, PLTR posting a quarterly profit of $0.06 a share as sales surged +27% — thanks to growing demand for its AIP Logic platform, that tests and improves artificial-intelligence-related strategies.
A big boost in Commercial-division sales shows that Palantir, is expanding (successfully) its overall business outside its legacy government-client list.
In his notes to shareholders, PLTR, CEO - Alex Karp said:
The playbooks of the past are no longer working.
Even the people who had believed in them now know this.
As if the S&P 500 index inclusion is not enough, on 09 Sep 2024, Palantir and oil giant BP Plc (BP) announced that they would be extending their decade’s strategic relationship. (see above)
At the same time, they are looking to introduce new artificial intelligence capabilities with Palantir’s AIP software product.
On 09 Sep 2024, PLTR share price was up +14.04% on the back of (a) recovery across all 3 boards and (b) PLTR inclusion in the S&P 500 index. (see above)
RocketLab.
Guilfoyle shared that:
Rocket Lab USA (RKLB) had been trading lower and is testing the highs of July 2024.
This has prompted him to take advantage of the recent selloff, adding to this long position at a price (low) that have not been seen in a month and a half.
Rocket Lab, up nearly +16% YTD, recently beat Wall Street's Q2 2024 earnings expectations. (see above)
Founder and CEO Sir Peter Beck said:
Q2 2024 was a huge quarter for Rocket Lab in a lot of ways but especially in terms of revenue.
By owning launch and spacecraft, RKLB at a distinct advantage when it comes to establishing their own space capabilities or constellations.
During 9 Aug 2024 post earnings call, Mr CEO has told analysts - RKLB can build and launch their own spacecraft at cost and do not have to wait in line for limited launch capacity.
On 03 Sep 2024 (last week) RKLB said it had set the launch window for its 53rd Electron Launch, the 2nd of five dedicated launches for French company - Kineis. (see above)
The “Kineis Killed the RadIOT Star” mission has been scheduled to launch from Rocket Lab Launch Complex 1 in Mahia, New Zealand, during a 14-day window that opens on 17 Sep 2024.
SoFi Technologies.
Last but not least, there's SoFi Technologies.
Guilfoyle was impressed with SoFi’s Chief Executive, Anthony Noto recent CNBC appearance acknowledging that the fintech "is seeing (a) improved deposits, (b) improved net flows and (c) improved spending."
SoFi stands to benefit from US Supreme Court's recent decision:
Not to reinstate the Biden administration’s student loan repayment plan, that aims to lower monthly payments for millions of borrowers.
Because it takes the weight off of taxpayers and placing it back on the borrowers. Such ruling (obviously) plays well for lenders like SoFi Technologies.
On 09 Sep 2024 when US market staged a recovery of-sort, after Fri, 06 Sep 2024 kneejerk reaction to US’s August 2024 non-farm payroll data, the fintech firm managed to marginally recover +1.0% in its share price.
Based on past 1 month performance, SoFi has been upped by +9.26%.
My viewpoints: (mine only)
Of the 3 stocks that Guilfoyle is holding, this is how they stacked against each other:
(1) Market cap:
PLTR - $77.485 billion.
SoFi - $7.547 billion.
RKLB - $3.049 billion.
(2) Volatility (beta factor):
PLTR - 2.71.
SoFi - 1.71.
RKLB - 1.27.
(3) Trading volume (average):
PLTR - 134,464,066.
SoFi - 32,692,966.
RKLB - 9,634,744.
Market cap and volatility indicators for the 3 stocks are inversely related.
This should not be the case for pure-breed blue chip stocks.
For example:
$JPMorgan Chase(JPM)$ - Financial services. Market cap - 584.851 billion and Beta = 1.11 only.
Nvidia Inc (NVDA)$ - Technology. Market cap - 2.652 trillion and Beta = 1.67 only.
Apple Inc (AAPL)$ - Consumer electronics. Market cap - 3.347 trillion and Beta = 1.24 only.
This implies that there is still some way to go for Palantir to become a true blue, blue-chip stock.
Its impending inclusion in the S&P 500 index is a good start.
Case Study: S&P 500 inclusion.
On a brighter note, there is a possibility that PLTR stock price could rise further with its S&P 500 inclusion.
S&P 500 Inclusion - Tesla illustration.
Using Tesla (TSLA) as an example.
On 16 Nov 2020, it was announced that Tesla would join the S&P 500 index, stock price was $408.09.
On 21 Dec 2020, the addition took effect, stock price was $649.86.
Tesla stock price has risen by +59.24%.
Will PLTR “suffer” the same fate as TSLA with its stock price inflating by +59% ? On Fri, 13 Sep 2024, it did hit a 52-week high of $35.76 momentarily.
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Do you think the 3 US stocks are worthy of a closer examination & purchase?
Do you think Palantir stock price will rise on the run up to S&P 500 inclusion, just like Tesla Inc?
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Be still my beating heart, two strong green days in a row!!!
Which AI stock is overbought?
NVDA PE = 54
PLTR PE = 209
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