As the Trump administration looks to find ways to cut back America’s $2+ trillion national debt, investors are eyeing companies with large government contracts. Staffing companies have already fallen on the logic that temporary workers for government agencies are out.
But now the trend is widening. It’s also hitting defense contractors, as cutting defense spending could be a key way to bridge the budget gap. However, investors may have an opportunity in today’s markets.
That’s because data-related spending is likely to continue in today’s digital age. Spending on other government programs may slow. But continued spending on analytics could bode well for big data giant Palantir Technologies (PLTR).
Shares have been hit hard in the current market, pulling back over 40% from their recent highs. Yet Palantir continues to rack up high-margin government contracts amid today’s loud market noise.
Action to take: With revenue growing by triple-digits right now, Palantir could be a strong winner when markets shift back to growth mode. And their data analytics services keep them resistant to today’s tariff fears. Speculative investors may like shares at current prices, or on any further drops under $70.
For traders, the July $95 calls, last trading for about $7.20, could see mid-double-digit returns or better on a bounce higher in the coming days. Traders should look to take quick profits.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.