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Datadog and Landstar System have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 7, 2024 – Zacks Equity Research shares Datadog (DDOG - Free Report) as the Bull of the Day and Landstar System (LSTR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and Palantir (PLTR - Free Report) .
Datadog has been my "sleeper" cybersecurity pick since last October when we bought it in the $80s for my TAZR Trader service.
DDOG is a data analytics company that makes tools for monitoring infrastructure and application performance, but their deep IT expertise and integrations for the Fortune 1,000 mean that they also guard the borders and the interior of enterprise data.
On October 16, I published a special report for Zacks Confidential members titled "State of Threat: Cyber Crime 3.0" where I highlighted the evolving sophistication of global threat actors wreaking havoc for all kinds of companies, including most recently MGM Resorts, 23andMe, and Flagstar Bank of Michigan.
In that report, I explained how "ransom ware" attacks just went full ICBM with state-sponsored infrastructure and weapons. If you want a copy, just email Ultimate@Zacks.com and tell 'em Cooker sent you for Cyber Crime report.
Here’s what I wrote when I bought DDOG for my TAZR Trader group in early October...
TAZR Portfolio is buying a starter position in Datadog between $85 and $90. We would add to this Zacks #1 Rank on any drop after earnings 11/7.
While DDOG is largely a data monitoring and analytics platform, Piper Sandler recently made it one of their top 5 cybersecurity picks as an end-to-end observability and cloud security platform. The Piper team has a price target for DDOG shares at $115, implying over 25% potential upside.
Data is the gold of this new digital age and we need look no further than the recent acquisition of Splunk by Cisco to see what enterprises are willing to invest to stay ahead.
Back in October, I also made an important note about one of the best private buy-and-hold hedge funds on the planet...
Baillie Gifford Stakes a Big DDOG Claim
One of my favorite institutional Technology investors, Baillie Gifford, increased their Datadog position by 70% in Q2 (2023) to make them the 3rd largest holder, behind Vanguard and BlackRock, with over 10 million shares.
If you've seen my pieces on those Scottish Warlords of Edinburgh, you know they are buy and hold fanatics who do deep research, especially in novel technology platforms like Tesla (TSLA).
So while we can see they would have been buying DDOG shares between $60 and $90 in Q2, I don't expect to see that they turned sellers in Q3. In fact, they were probably buying again on the earnings August gap down.
(end of notes from last October)
Where is Baillie Gifford Now?
While my followers enjoyed the rally up above $130 for DDOG shares this year, and we tried another recent buy at $114 for a potential swing back up there, July was not a pretty sight for any technology investors.
I don't know exactly what the Scottish Warlords of Edinburgh did in the past month, but I can tell what they didn't do in Q2 of 2024.
The didn't sell DDOG. Well, only 1.3% of their stash anyway. As of June 30, they still held nearly 9.5 million shares.
Since July 17 when the Nasdaq started its waterfall into a bear market, and CrowdStrike (CRWD - Free Report) stunk up the joint with a big "user error," here is how "the guard dog of data" held up vs the other two (based on Monday's closes)...
CRWD: -40%
QQQ: -12%
DDOG: -20%
Not too shabby. Based on the fact that DDOG had a lower-beta correction than most tech stocks, I'm guessing "BG" didn't panic in the last month. And on Monday, I'm so confident that they were buyers in the Bank of Japan panic, I'm going to buy shares again myself before DDOG reports on Thursday August 8.
In fact, BG warriors might have had even more conviction after the "crowd de-funding" debacle that shut down Delta before the weekend of July 19-22.
But Wait -- There's More!
Last week BTIG upgraded Datadog to Buy From Neutral with a $143 price target. The average PT among 33 analysts, as of last Friday, is $145, representing 38% upside.
And as I write on Tuesday afternoon, Akamai Technologies (AKAM - Free Report) announced it formed a partnership with Datadog for a new security offering with the integration of Datadog's security information and event management technology with Akamai's Zero Trust services.
The integration is expected to offer clients enhanced visibility, improved threat detection and response, and compliance and regulatory adherence, among other benefits.
Bottom line: Buy "the guard dog of data" before earnings and let's see if we get another beat-and-raise ripper like we saw last November when all Street expectations were way too low. Near $105, you're getting a 22% topline grower that is trading just over 11X forward sales. And it's profitable growing EPS at 16.5% this year and next.
Amid heightened market volatility investors will certainly be cautious of “pricey” stocks that could fall as many of the big tech giants are starting to give back their lofty gains as well.
Unfortunately, Landstar System is one such stock that could drop as last week’s weaker-than-expected jobs report sparked mild recessionary fears in the US while tensions between Iran and Israel have led to global geopolitical concerns.
Landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day, let’s see why there may be more downside risk ahead for the transportation management solutions company.
Weaker Industry Demand
Landstar has been grappling with a challenging freight environment as the impact of accumulated inflation on goods continues to impact truckload volumes in relation to consumer spending.
Correlating with such, Landstar’s Zacks Transportation-Truck Industry is currently in the bottom 3% of over 250 Zacks industries. Feeling the industry's rift, Landstar reported Q2 EPS of $1.48 last Tuesday which declined 20% from $1.85 a share in the comparative quarter despite slightly edging expectations.
However, quarterly sales of $1.22 billion missed estimates of $1.25 billion by 2% and declined 11% from $1.37 billion in Q2 2023.
Subpar Q3 Guidance
Further indicating it may be time to sell Landstar’s stock was the company’s weaker-than-expected EPS and revenue guidance for the third quarter. This has led to earnings estimate revisions dropping in the last week with Landstar’s fiscal 2024 and FY25 EPS estimates now down 4% and 5% over the last 30 days respectively.
Valuation Concerns
Lastly, Landstar has some valuation concerns such as the company’s EV/ EBITDA ratio and price-to-cash flow which is higher than preferred levels and its industry average.
Landstar does trade at 30.6X forward earnings which is slightly below its industry average of 31.5X but above the S&P 500’s 22.5X. Furthermore, industry risk and declining EPS estimates may start to question the earnings premium Landstar commands to the broader market.
Bottom Line
With broader indexes experiencing a correction over the last week, Landstar’s price tag of $185 a share may not be worth the risk at the moment considering the weaker outlook for the tranportation-trucking industry.
Additional content:
Palantir Stock Rises After Earnings: Dark Horse of AI Applications?
The AI revolution has been the leading theme of the market this year, but the last couple of weeks have spurred doubts about the applications and profit potential of the technology. While tech giants like Microsoft and Alphabet had to reassure investors that their recent capex will eventually reap profits, Palantir has cleared up any doubts about its monetization of the technology.
At its quarterly earnings report on Monday afternoon, Palantir posted a strong period, beating both top and bottom-line estimates. Customer count grew 41% year-on-year revenue grew 27% and adjusted earnings per share (EPS) grew 80% year-on-year.
Management noted the impressive growth rates across its business segments and highlighted the especially promising AI platform, which grew revenue 55% year-on-year. Outspoken CEO Alex Karp believes that his company is in a league of its own when it comes to real life use of AI technology.
AI Platform at Palantir
Palantir has been a trailblazer in the technology sector and was an early pioneer in the AI space. As a data analytics and enterprise software company, it has been ahead of its competitors, focusing on collecting, organizing and analyzing disparate data sets for its clients and providing actionable insights.
Originally focused on government and intelligence agencies, Palantir has expanded its customer base to include commercial enterprises in sectors like finance, healthcare, and manufacturing. The company's technology is often used for tasks like fraud detection, supply chain optimization, and operational efficiency.
Today, things are moving fast. Palantir's business has evolved significantly with the launch of its flagship AI platform, AIP, just over a year ago. This platform has driven transformative growth across both commercial and government markets. In Q2 2024, Palantir generated $159 million in revenue in the U.S. commercial market alone, marking a 55% increase from the previous year. When excluding strategic commercial contracts, the growth rate soared to 70% year-over-year. This robust demand for effective enterprise AI solutions highlights the platform's impact.
Palantir’s AI capabilities have been critical in surpassing traditional enterprise software's limitations, providing real value through sophisticated data integration and analysis. Unlike many past enterprise solutions that focused on data shuffling without substantial outcomes, Palantir’s AIP addresses real-world challenges with AI-driven insights.
The company has seen remarkable growth in its customer base, with nearly 300 commercial customers in the U.S. alone, up from just 14 four years ago. This expansion reflects a broader trend of institutions adapting quickly to leverage AI, particularly in the U.S., where Palantir's revenue from government contracts has also exceeded $1 billion over the past twelve months.
Palantir presents hard evidence showing effectiveness of its AI platform, which is more than Alphabet and Microsoft can say. While I have no doubt that both Alphabet and Microsoft will find useful integrations for AI, Palantir is doing it today.
Palantir Stock Shows Strong Momentum
The price action in Palantir stock has been quite bullish since the start of year, with the stock moving in rapid spurts. It is outperforming the broad market and many leading stocks, demonstrating its powerful momentum and relative strength.
Also notable is how well the share price has held up during the most recent bout of volatility. Many stocks have been hit hard over the past few weeks, while Palantir is approaching its year-to-date high. PLTR stock currently sits about 40% below its all-time high price from back in 2021.
High Growth Forecasts at Palantir
As noted in the earnings report, Palantir is growing fast. Sales over the next two years are projected to increase over 20% annually and EPS are forecast to grow 26.8% annually over the next three to five years.
Palantir has a Zacks Rank #3 (Hold) rating, indicating a flat earnings revision trend.
Palantir Shares Trade at a Premium Valuation
While Palantir enjoys strong growth rates and huge potential in the AI and enterprise software space, investors must pay up to get the exposure. PLTR is currently trading at an exceptionally high relative valuation.
At nearly 20x forward sales and 68x forward earnings, Palantir is among the richest stocks of its size. For investors this begs the question of whether they are willing to pay the premium for AI potential.
Should Investors Buy Palantir Stock?
Palantir has a lot going for it and is arguably one of the leaders of the AI revolution. Its ability to actually monetize AI technology puts it above other leading tech firms.
However, the stock is incredibly expensive. For investors who seek value, and low risk, Palantir may not be the stock for you. But for investors looking for strong momentum, potentially world-altering technology, and more volatility, Palantir may fit into their portfolio.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Datadog and Landstar System have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 7, 2024 – Zacks Equity Research shares Datadog (DDOG - Free Report) as the Bull of the Day and Landstar System (LSTR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and Palantir (PLTR - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Datadog has been my "sleeper" cybersecurity pick since last October when we bought it in the $80s for my TAZR Trader service.
DDOG is a data analytics company that makes tools for monitoring infrastructure and application performance, but their deep IT expertise and integrations for the Fortune 1,000 mean that they also guard the borders and the interior of enterprise data.
On October 16, I published a special report for Zacks Confidential members titled "State of Threat: Cyber Crime 3.0" where I highlighted the evolving sophistication of global threat actors wreaking havoc for all kinds of companies, including most recently MGM Resorts, 23andMe, and Flagstar Bank of Michigan.
In that report, I explained how "ransom ware" attacks just went full ICBM with state-sponsored infrastructure and weapons. If you want a copy, just email Ultimate@Zacks.com and tell 'em Cooker sent you for Cyber Crime report.
Here’s what I wrote when I bought DDOG for my TAZR Trader group in early October...
TAZR Portfolio is buying a starter position in Datadog between $85 and $90. We would add to this Zacks #1 Rank on any drop after earnings 11/7.
While DDOG is largely a data monitoring and analytics platform, Piper Sandler recently made it one of their top 5 cybersecurity picks as an end-to-end observability and cloud security platform. The Piper team has a price target for DDOG shares at $115, implying over 25% potential upside.
Data is the gold of this new digital age and we need look no further than the recent acquisition of Splunk by Cisco to see what enterprises are willing to invest to stay ahead.
Back in October, I also made an important note about one of the best private buy-and-hold hedge funds on the planet...
Baillie Gifford Stakes a Big DDOG Claim
One of my favorite institutional Technology investors, Baillie Gifford, increased their Datadog position by 70% in Q2 (2023) to make them the 3rd largest holder, behind Vanguard and BlackRock, with over 10 million shares.
If you've seen my pieces on those Scottish Warlords of Edinburgh, you know they are buy and hold fanatics who do deep research, especially in novel technology platforms like Tesla (TSLA).
So while we can see they would have been buying DDOG shares between $60 and $90 in Q2, I don't expect to see that they turned sellers in Q3. In fact, they were probably buying again on the earnings August gap down.
(end of notes from last October)
Where is Baillie Gifford Now?
While my followers enjoyed the rally up above $130 for DDOG shares this year, and we tried another recent buy at $114 for a potential swing back up there, July was not a pretty sight for any technology investors.
I don't know exactly what the Scottish Warlords of Edinburgh did in the past month, but I can tell what they didn't do in Q2 of 2024.
The didn't sell DDOG. Well, only 1.3% of their stash anyway. As of June 30, they still held nearly 9.5 million shares.
Since July 17 when the Nasdaq started its waterfall into a bear market, and CrowdStrike (CRWD - Free Report) stunk up the joint with a big "user error," here is how "the guard dog of data" held up vs the other two (based on Monday's closes)...
CRWD: -40%
QQQ: -12%
DDOG: -20%
Not too shabby. Based on the fact that DDOG had a lower-beta correction than most tech stocks, I'm guessing "BG" didn't panic in the last month. And on Monday, I'm so confident that they were buyers in the Bank of Japan panic, I'm going to buy shares again myself before DDOG reports on Thursday August 8.
In fact, BG warriors might have had even more conviction after the "crowd de-funding" debacle that shut down Delta before the weekend of July 19-22.
But Wait -- There's More!
Last week BTIG upgraded Datadog to Buy From Neutral with a $143 price target. The average PT among 33 analysts, as of last Friday, is $145, representing 38% upside.
And as I write on Tuesday afternoon, Akamai Technologies (AKAM - Free Report) announced it formed a partnership with Datadog for a new security offering with the integration of Datadog's security information and event management technology with Akamai's Zero Trust services.
The integration is expected to offer clients enhanced visibility, improved threat detection and response, and compliance and regulatory adherence, among other benefits.
Bottom line: Buy "the guard dog of data" before earnings and let's see if we get another beat-and-raise ripper like we saw last November when all Street expectations were way too low. Near $105, you're getting a 22% topline grower that is trading just over 11X forward sales. And it's profitable growing EPS at 16.5% this year and next.
Bear of the Day:
Amid heightened market volatility investors will certainly be cautious of “pricey” stocks that could fall as many of the big tech giants are starting to give back their lofty gains as well.
Unfortunately, Landstar System is one such stock that could drop as last week’s weaker-than-expected jobs report sparked mild recessionary fears in the US while tensions between Iran and Israel have led to global geopolitical concerns.
Landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day, let’s see why there may be more downside risk ahead for the transportation management solutions company.
Weaker Industry Demand
Landstar has been grappling with a challenging freight environment as the impact of accumulated inflation on goods continues to impact truckload volumes in relation to consumer spending.
Correlating with such, Landstar’s Zacks Transportation-Truck Industry is currently in the bottom 3% of over 250 Zacks industries. Feeling the industry's rift, Landstar reported Q2 EPS of $1.48 last Tuesday which declined 20% from $1.85 a share in the comparative quarter despite slightly edging expectations.
However, quarterly sales of $1.22 billion missed estimates of $1.25 billion by 2% and declined 11% from $1.37 billion in Q2 2023.
Subpar Q3 Guidance
Further indicating it may be time to sell Landstar’s stock was the company’s weaker-than-expected EPS and revenue guidance for the third quarter. This has led to earnings estimate revisions dropping in the last week with Landstar’s fiscal 2024 and FY25 EPS estimates now down 4% and 5% over the last 30 days respectively.
Valuation Concerns
Lastly, Landstar has some valuation concerns such as the company’s EV/ EBITDA ratio and price-to-cash flow which is higher than preferred levels and its industry average.
Landstar does trade at 30.6X forward earnings which is slightly below its industry average of 31.5X but above the S&P 500’s 22.5X. Furthermore, industry risk and declining EPS estimates may start to question the earnings premium Landstar commands to the broader market.
Bottom Line
With broader indexes experiencing a correction over the last week, Landstar’s price tag of $185 a share may not be worth the risk at the moment considering the weaker outlook for the tranportation-trucking industry.
Additional content:
Palantir Stock Rises After Earnings: Dark Horse of AI Applications?
The AI revolution has been the leading theme of the market this year, but the last couple of weeks have spurred doubts about the applications and profit potential of the technology. While tech giants like Microsoft and Alphabet had to reassure investors that their recent capex will eventually reap profits, Palantir has cleared up any doubts about its monetization of the technology.
At its quarterly earnings report on Monday afternoon, Palantir posted a strong period, beating both top and bottom-line estimates. Customer count grew 41% year-on-year revenue grew 27% and adjusted earnings per share (EPS) grew 80% year-on-year.
Management noted the impressive growth rates across its business segments and highlighted the especially promising AI platform, which grew revenue 55% year-on-year. Outspoken CEO Alex Karp believes that his company is in a league of its own when it comes to real life use of AI technology.
AI Platform at Palantir
Palantir has been a trailblazer in the technology sector and was an early pioneer in the AI space. As a data analytics and enterprise software company, it has been ahead of its competitors, focusing on collecting, organizing and analyzing disparate data sets for its clients and providing actionable insights.
Originally focused on government and intelligence agencies, Palantir has expanded its customer base to include commercial enterprises in sectors like finance, healthcare, and manufacturing. The company's technology is often used for tasks like fraud detection, supply chain optimization, and operational efficiency.
Today, things are moving fast. Palantir's business has evolved significantly with the launch of its flagship AI platform, AIP, just over a year ago. This platform has driven transformative growth across both commercial and government markets. In Q2 2024, Palantir generated $159 million in revenue in the U.S. commercial market alone, marking a 55% increase from the previous year. When excluding strategic commercial contracts, the growth rate soared to 70% year-over-year. This robust demand for effective enterprise AI solutions highlights the platform's impact.
Palantir’s AI capabilities have been critical in surpassing traditional enterprise software's limitations, providing real value through sophisticated data integration and analysis. Unlike many past enterprise solutions that focused on data shuffling without substantial outcomes, Palantir’s AIP addresses real-world challenges with AI-driven insights.
The company has seen remarkable growth in its customer base, with nearly 300 commercial customers in the U.S. alone, up from just 14 four years ago. This expansion reflects a broader trend of institutions adapting quickly to leverage AI, particularly in the U.S., where Palantir's revenue from government contracts has also exceeded $1 billion over the past twelve months.
Palantir presents hard evidence showing effectiveness of its AI platform, which is more than Alphabet and Microsoft can say. While I have no doubt that both Alphabet and Microsoft will find useful integrations for AI, Palantir is doing it today.
Palantir Stock Shows Strong Momentum
The price action in Palantir stock has been quite bullish since the start of year, with the stock moving in rapid spurts. It is outperforming the broad market and many leading stocks, demonstrating its powerful momentum and relative strength.
Also notable is how well the share price has held up during the most recent bout of volatility. Many stocks have been hit hard over the past few weeks, while Palantir is approaching its year-to-date high. PLTR stock currently sits about 40% below its all-time high price from back in 2021.
High Growth Forecasts at Palantir
As noted in the earnings report, Palantir is growing fast. Sales over the next two years are projected to increase over 20% annually and EPS are forecast to grow 26.8% annually over the next three to five years.
Palantir has a Zacks Rank #3 (Hold) rating, indicating a flat earnings revision trend.
Palantir Shares Trade at a Premium Valuation
While Palantir enjoys strong growth rates and huge potential in the AI and enterprise software space, investors must pay up to get the exposure. PLTR is currently trading at an exceptionally high relative valuation.
At nearly 20x forward sales and 68x forward earnings, Palantir is among the richest stocks of its size. For investors this begs the question of whether they are willing to pay the premium for AI potential.
Should Investors Buy Palantir Stock?
Palantir has a lot going for it and is arguably one of the leaders of the AI revolution. Its ability to actually monetize AI technology puts it above other leading tech firms.
However, the stock is incredibly expensive. For investors who seek value, and low risk, Palantir may not be the stock for you. But for investors looking for strong momentum, potentially world-altering technology, and more volatility, Palantir may fit into their portfolio.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.