For years now, stocks have generally been on a bull run. As a result, the prices of more than a few have climbed mountain-high and can really produce sticker shock.
But the wonderful thing about the broad and deep U.S. equity market is that there are more than a few inexpensive titles that won't induce such a startling response. Here's a look at a trio of growth stocks cheaper than an Andrew Jackson -- Matterport (MTTR -4.17%), Palantir Technologies (PLTR 3.19%), and SoFi Technologies (SOFI 4.55%).
Image source: Getty Images.
1. Matterport
The recent decline of growth stocks makes now a fine time to buy this $16 per-share company, which is a superb play on the coming of the metaverse. Matterport makes perfectly scaled digital replicas of interior spaces, so you can recreate your home, office, or any other kind of space in the virtual world. The metaverse isn't going to be very interesting without such locales, so this kind of technology will be essential.
Smartly, Matterport offers its tech to consumers through smart-device apps and operates on the freemium model. This is an effective way to capture future devotees -- provide initial renderings free of charge, then collect from them when they start using the services more frequently.
Matterport is a new arrival to the stock exchange, having merged with its special purpose acquisition company (SPAC) last July. It's doing a fine job roping in users. At the end of last September, its total subscriber count stood at roughly 439,000 -- a 116% year-over-year improvement.
The key cohort of that population -- paying subscribers, of course -- jumped 35%. That's a much lower number than the total, but it still helped lift Q3's total revenue by 10%.
As with many youthful growth companies, Matterport isn't yet consistently profitable. Its popularity as a leading metaverse stock has also pushed its valuations high into the stratosphere, even after a sharp pullback at the end of 2021. Still, the company is front and center of the meta revolution that's about to slam into us, and its solid tech and first-mover advantage should push it ahead in the coming years.
2. Palantir Technologies
At just under $17 per share, Palantir is down by more than 50% from its peak price nearly one year ago. It really isn't deserving of such treatment, because like Matterport, it's sitting on top of a big trend that's only going to swell.
I'm talking about data, great piles of which have been produced -- and will continue to be so -- by the digitization of nearly every aspect of our lives. With so much information under our feet ripe for organization and analysis, Palantir provides such services through two software platforms, Gotham and Foundry, that run on a proprietary operating system called Apollo.
Gotham is aimed at public agencies, and as such, the U.S. government is a large and important client. Foundry, meanwhile, targets large enterprises in the private sector. The former provides a very solid base for Palantir, while the ever-expanding universe of large companies gives it potential for strong and sustained growth well into the future.
The company is pushing to exploit that potential. The customer count in the commercial segment grew 46% in Q3, and that was only on a quarter-over-quarter basis. That was due to a clearly effective sales strategy, which helped rope in no less than 54 deals worth at least $1 million. Ka-ching!
There should be plenty more where that came from. Collectively, analysts tracking Palantir stock expect the company to lift its non-GAAP (adjusted) net income per share by 33% in 2022, compared to the 2021 figure. That'll be on the back of slightly more than 30% revenue growth. Meanwhile, that stack of data is only going to get higher, so Palantir's business looks extremely attractive well beyond that one-year period.
3. SoFi Technologies
Back in the golden old days of, say, 2005 or so, financial-services consumers typically utilized the offerings of specialists in the sector -- banks, brokerages, boutique mortgage lenders, etc. What a difference a mere 17 years makes!
These days, we have the under-$14 per-share SoFi, a restless fintech up-and-comer aiming to wrap this sprawling collection of financial services into a single ecosystem. Through SoFi, users can access a great many financial services, and do it through a well-engineered mobile app.
The company targets younger users, reaching into the toolbox of some of the more effective social media companies -- hence its name, which is short for "Social Finance." This placement of our financial selves into a digital forum is a new and refreshing approach that has great potential because everyone is at least a bit anxious about their own investments and curious about the myriad options available to them.
SoFi's approach is clearly working. User growth has been hot, with a 96% year-over-year rise in the number of the system's members in Q3 (to around 2.9 million people), trailed by 126% and 100%, respectively, in the two preceding quarters. Even the most scorching growth companies rarely achieve three consecutive quarters in which their user bases more or less double.
Although SoFi continues to post the kind of losses expected of a growth stock, adjusted net revenue is experiencing a nice upward tilt. It climbed from Q1's $216 million to $237 million the next quarter and $277 million in Q3.
With SoFi's growing user base of young people, many of whom are sure to stay hooked into the ecosystem for a long time, investors can expect sustained growth on the top line -- and before long, meaningful profitability from this exciting young fintech.
