Prediction: 2 Stocks That'll Be Worth More Than Palantir in 5 Years

What’s the top stock in the S&P 500 for 2024? Palantir Technologies (PLTR) is currently leading the pack. The shares of this artificial intelligence (AI) and data analytics software company have surged more than 320% year to date.

As a result of this remarkable performance, Palantir's market capitalization has reached approximately $165 billion. However, I believe that Palantir's upward momentum may slow down soon. Here are two stocks I anticipate will surpass Palantir's value five years from now.

Expanding Growth Potential

Intuitive Surgical (ISRG) is a stock that many might assume is an obvious choice. The maker of robotic surgical systems already has a market cap of about $194 billion, surpassing that of Palantir. But I am convinced that Intuitive Surgical will not only maintain this larger value now but will also grow even bigger in the future.

This company has shown strong growth in 2024, although it hasn't quite matched Palantir's sheer performance. In the third quarter of 2024, Intuitive's da Vinci surgical system installed base increased by 15% compared to the previous year, and the volume of procedures surged by 18%. This growth in installed systems and procedure volume indicates promising revenue and earnings growth for the company.

As we look ahead, Intuitive Surgical stands to benefit from a significant demographic trend. As populations age in the U.S. and globally, the demand for surgical procedures is likely to rise. This change should contribute to increased procedure volumes for the da Vinci system.

In 2023, about 2.2 million procedures were conducted using da Vinci. Intuitive Surgical estimates there are around 7 million procedures performed each year related to its products. However, the number of soft tissue surgeries conducted annually is three times greater than that, providing a vast opportunity for growth.

While some might criticize Intuitive Surgical for its current valuation, with shares trading at around 69 times forward earnings, this is still more attractive compared to Palantir's forward earnings multiple of 161.

A Bold Prediction

Another unexpected forecast involves Pfizer (PFE). Currently, Pfizer's market cap of $145 billion falls below that of Palantir. Despite many stocks rallying this year, Pfizer's shares have taken a hit. So, what justifies this contrarian outlook?

In my opinion, Pfizer is a vastly undervalued stock, whereas Palantir might be overhyped. Pfizer's shares trade at a low 8.6 times forward earnings, significantly below the average multiple for healthcare stocks within the S&P 500. Furthermore, Pfizer’s price-to-earnings-to-growth (PEG) ratio stands at a mere 0.18, according to market data.

It's true that Pfizer's stock is cheap for specific reasons. After enjoying a surge in revenue from its COVID-19 products, that sales peak has fallen quite drastically. The company is also facing the expiration of patent exclusivity on several profitable drugs, which adds pressure as investors wonder what a second Trump administration might mean for the company.

Despite these challenges, Pfizer has smartly utilized a large portion of its COVID-fueled cash reserves to enhance its product offerings and pipeline. This includes new products resulting from strategic acquisitions, such as the migraine treatment Nurtec ODT and cancer therapies like Adcetris, Padcev, and Tukysa. Pfizer's internal research and development efforts are also yielding results, as shown by the strong market share of its new respiratory syncytial virus vaccine, Abrysvo.

Additionally, Pfizer boasts one of the most appealing dividend yields in the healthcare sector, currently exceeding 6.7%. The company's management prioritizes maintaining and increasing this dividend as a key aspect of their financial strategy.

While Pfizer may not possess the glamor of Palantir, there are indications that investors may start to view it more favorably over the next five years, particularly as it generates stronger-than-expected growth. If my predictions hold, Pfizer could indeed emerge as a larger company than Palantir by the decade's end.

stocks, analysis, prediction