Palantir (NASDAQ:PLTR) has been a rocket ship in the past couple of years. It has delivered returns that many investors thought were only possible in the dot-com bubble era. Valuations have soared to levels that have dwarfed nearly every other big-cap company trading publicly.
Even after a recent pullback, Palantir still commands some of the richest multiples out there. The stock’s meteoric rise has turned heads and fattened wallets. Unfortunately, buying now is unlikely to be a golden ticket to multibagger returns since the stock is already quite fundamentally overvalued.
With that in mind, it’s a good idea to hunt for similar growth stocks that are trading at much cheaper valuations. There are companies with solid fundamentals and room to run as their businesses scale. The market loves a good growth story, and I believe there are hidden gems out there ready to deliver 200%-plus gains. Here are two to look into.
Booz Allen Hamilton (NYSE:BAH) is one of the most similar companies to Palantir. It has carved out a solid niche in management and consulting technology. In FY2024, it raked in $10.7 billion in revenue, and 98% came from government clients. This used to be a solid bull factor, though they sound more like a risk in the current climate.
I see those contracts as a strength because the company focuses heavily on national security, an area where Uncle Sam isn’t likely to skimp too much, even though it took a hit from a $580 million contract canceled by Hegseth earlier, though that’s more than priced in right now. The company is a leader in deploying AI for the government and covers both software and hardware. Both companies partnered late last year.
The stock is down 41.6% from its peak due to DOGE-related fears. That’s a massive overreaction as these cuts have slowed down, and it’s highly unlikely that DOGE will reach $1 trillion in cuts. And even if it does, it’s unlikely to massively hit Booz Allen Hamilton’s contracts.
BAH is now an AI stock with government contracts at 16 times earnings and with a 2% dividend yield. The financials are also quite stellar. Q4 2024 revenue rose 13.52% year-over-year to $2.92 billion, and EPS grew 30.63% year-over-year to $1.45. Both surpassed analyst estimates.
The consensus price target of $158.3 implies 49% upside potential, but I believe a 200%-plus upside is possible over the coming years. The highest price target implies over 100% upside in the next year.
UiPath (NYSE:PATH) is a software company making robotic process automation software. It is among the biggest names in its niche and has started a significant recovery rally due to the AI narrative gaining steam. However, the stock has recently taken a hit due to the recent wave of AI pessimism.
Companies worldwide are pouring cash into automating as much as possible, and UiPath is perfectly positioned to cash in. Its growth hinges on execution. If it keeps expanding its customer base and boosts profitability, the valuation could multiply as it has done before. There’s also a pivot to agentic AI that the company is well-positioned to benefit from.
Cloud ARR grew 50% year-over-year to $975 million, and the company also has $1.7 billion in cash and zero debt. The growth may be disappointing for an AI company, but I think the best growth is ahead of the company as more companies join in on the robotics trend. The stock is down 57.4% from its February 2024 prices.
