Both Palantir (NASDAQ: PLTR) and Sandisk (NASDAQ: SNDK) have had a great few weeks. Since the calendar flipped to August, Palantir's stock has risen more than 40%, and Sandisk's is up 35%. That's a great return in just a few weeks, but what investors need to know is if this rally is worth buying into or if a near-term top has been reached.
Let's take a look at what these two have going on and why Wall Street is more bullish on one than the other. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Wall Street analysts offer one-year price targets for stocks to indicate the direction they expect the stock to go. While investors shouldn't treat these estimates as gospel, they should consider them, as the targets can help form a consensus about whether the analyst community believes a stock is overvalued or undervalued.
For Sandisk, its current price target is just over $2,100, a fair bit above today's current $1,600 stock price. If Sandisk suddenly rose to that level, it would provide investors with just over a 30% gain. Palantir's outlook isn't rosy.
The average price target is $192, about 10% higher than today's price. While a 10% gain in one year isn't nothing, that's about the average performance of the market over any given one-year period. You're not buying individual stocks to match the market; you're buying them to beat the market.
As a result, a mere 10% gain in Palantir's stock over the next year would be disappointing to the average investor. Clearly, the analyst community prefers Sandisk to Palantir. These two companies may be associated with the AI race, but they're pretty much unrelated.
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