Why Palantir Technologies Inc. (PLTR) is a Top Stock for the Long-Term

Here at Zacks, we offer our members many different opportunities to take full advantage of the stock market, as well as how to invest in ways that lead to long-term success.

The Zacks Premium service, which provides daily updates of the Zacks Rank and Zacks Industry Rank; full access to the Zacks #1 Rank List; Equity Research reports; and Premium stock screens like the Earnings ESP filter, makes these more manageable goals. All of the features can help you identify what stocks to buy, what to sell, and what are today's hottest industries.

The service also includes the Focus List, which is a long-term portfolio of top stocks that boast a winning, market-beating combination of growth and momentum qualities.

Breaking Down the Zacks Focus List

Building an investment portfolio from scratch can be difficult, so if you could, wouldn't you take a peek at a curated list of top stocks?

Enter the Zacks Focus List. It's a portfolio made up of 50 stocks that are set to beat the market over the next 12 months; each company selected serves as a foundation for long-term investors looking to create an individual portfolio.

Additionally, each selection is accompanied by a full Zacks Analyst Report, something that makes the Focus List even more valuable. The report explains in detail why each stock was picked and why we believe it's good for the long-term.

The portfolio's past performance only solidifies why investors should consider it as a starting point. For 2020, the Focus List gained 13.85% on an annualized basis compared to the S&P 500's return of 9.38%. Cumulatively, the portfolio has returned 2,519.23% while the S&P returned 854.95%. Returns are for the period of February 1, 1996 to March 31, 2021.

Focus List Methodology

When stocks are picked for the Focus List, it reflects our enduring reliance on the power of earnings estimate revisions.

Brokerage analysts are in charge of determining a company's growth and profitability expectations, or earnings estimates. These analysts work together with company management to evaluate all factors that may affect future earnings, like interest rates, the economy, and sector and industry optimism.

What a company will earn down the road also needs to be taken into consideration, and this is why earnings estimate revisions are so important.

Stocks that receive upward earnings estimate revisions are more likely to receive even more upward changes in the future. For example, if an analyst raised their estimates last month, they're more likely to do it again this month, and other analysts are likely to do the same.

Harnessing the power of earnings estimate revisions is where the Zacks Rank comes in. The Zacks Rank is a unique, proprietary stock-rating model that utilizes changes to a company's quarterly earnings expectations to help investors build a winning portfolio.

Four primary factors make up the Zacks Rank: Agreement, Magnitude, Upside, and Surprise. Each is given a raw score that's recalculated every night and compiled into the Rank, and with this data, stocks are then classified into five groups, ranging from "Strong Buy" to "Strong Sell."

The Focus List is comprised of stocks hand-picked from a long list of #1 (Strong Buy) or #2 (Buy) ranked companies, meaning that each new addition boasts a bullish earnings consensus among analysts.

It can be very profitable to buy stocks with rising earnings estimates, as stock prices respond to revisions. By adding Focus List stocks, there's a great chance you'll be getting into companies whose future earnings estimates will be raised, which can lead to price momentum.

Focus List Spotlight: Palantir Technologies Inc. (PLTR)

Palantir Technologies Inc., founded in 2003, develops and deploys software platforms that serve as operating systems for government and commercial organizations. Its software supports intelligence and counterterrorism operations in the United States and internationally.

On March 26, 2024, PLTR was added to the Focus List at $24.51 per share. Shares have increased 591.68% to $169.53 since then, and the company is a #1 (Strong Buy) on the Zacks Rank.

For fiscal 2026, 11 analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.12 to $1.6. PLTR boasts an average earnings surprise of 15.8%.

Moreover, analysts are expecting PLTR's earnings to grow 113.3% for the current fiscal year.

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This article originally published on Zacks Investment Research (zacks.com).

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