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The DOW and S&P both hit new records again as the market closes in the green.
The market indices ended the day in the green.
The S&P 500 and DOW Jones indices once again set record highs by the close. The $1 trillion infrastructure bill and optimistic inflation indicators from yesterday’s Consumer Price Index kept investors more confident in the future.
Also, the new weekly jobless claims report came out today, down to 375,000 new claims, lower by 12,000 compared to the last week. Overall, the market had an optimistic outlook, and the indices reflected that.
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Palantir Technologies (PLTR) keeps winning government contracts and the stock is soaring in response.
Our first defense stock of the day is Palantir (PLTR). The company popped up on today’s winning list of stocks. This technology company is focused on helping large operations manage their data efficiently for better decision-making. Palantir has a history of winning government contracts, like this May, when the U.S. The Air Force awarded them a $32 million contract to provide strategizing software in critical missions. Its biggest deal ever was in December 2019, when Palantir was picked for an Army contract. The Army recently opted for the second year in this ongoing contract that could total over $800 million in value. By the end of 2020, about 50% of Palantir’s revenue was coming from government contracts, giving us enough reasons to group it as a defense stock.
Today's earnings report pushed the stock up over 11% after investors were happy to see a 49% growth in revenue. Judging by its Stock Card, Palantir won’t have problems with cash anytime soon, and it has some great sales growth.
Kratos Defense (KTOS) may be a dependable contractor, but is it a dependable stock?
Speaking of defense contracts reminded me that I saw Kratos Defense & Security Solutions (KTOS) on Stock Card’s earnings calendar last week. The company released its quarterly earnings on the 3rd, which showed a 20% growth in revenue year-over-year. The company predicted equal if not slightly lower revenue for the coming quarter, citing an international training contract that it lost as the primary reason. This is likely why the stock dropped from $27 to under $24 and has yet to climb back since.
Investors are expecting more hefty contracts like the one Kratos was paid $55 million for in February. For this contract, the company would provide hardware and systems for the government’s unmanned drone, satellite, and defense operations.
It's no wonder the company's Stock Card paints a great picture. Not only is it profitable with free cash flow, but management has also done a great job on returns for invested capital, which you can see under the management effectiveness tab. Kratos was founded in 1994 and has some longstanding ties with the government for contract work. They’ve been recognized as a dependable company, and I would have to agree. It also doesn't hurt that you can invest in the stock now at a reasonable price, based on an average analyst price target of $28-ish per share from the estimated fair share price section on its Stock Card.
In a way, Kratos Defense is the opposite of Palantir Technology. One is a newcomer that is hard to trust, and the other is an old-timer that keeps winning.
Kratos is a top-25 holding on the iShares US Aerospace and Defense ETF (ITA) that you can find by searching ITA in the search bar on Stock Card. It's also a top 25-holding of ARK Autonomous Technology&Robotics ETF (ARKQ).
Comparing ARKQ with ITA, ARK's ETF has a better fee and cost structure and has outperformed the S&P, and it's undervalued at the current price. At the same time, the ITA is reasonably priced with a lackluster performance track record compared to the S&P 500. Between PLTR, KTOS, ARKQ, and ITA, I would rather invest in ARKQ to get some exposure to defense stocks instead and still get a well-priced and well-performing investment. ARKQ wins my vote today as a defense-oriented ETF, although I know it's not exactly a defense ETF.
NEW STOCK CARD FEATURE
Announcing: Stock Card’s new ETF cards!
Folks, last week, we rolled out a significant new update to Stock Card. We greatly improved our ETF Cards! Earlier today, I uploaded a quick rundown to show you how to research ETFs using the ARK Innovation ETF (ARKK) example.
The Stock Card team and I are super excited to let you guys get your hands on this tool! ETF Cards have been one of the most requested features that you have asked for in the last 12 months, and your wish is our command.
For a more in-depth explanation, I'd like to invite you to check out the demo video.
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