Given the stock market’s complex and ever-evolving nature, billionaire investors must occasionally rebalance their portfolios. This often provides retail investors with relevant insights and notable trends that can be used to strengthen their equity portfolios further.
The ongoing market volatility has seen a few billionaire investors and hedge funds reduce their holdings in American stocks such as Palantir (NASDAQ:PLTR). Moreover, these investors are building positions in blue-chip Canadian companies such as Brookfield Infrastructure Partners (TSX:BIP.UN). Let’s dive deeper.
Is Palantir stock overvalued?
Valued at a market cap of US$179 billion, Palantir is among the largest technology companies globally. Palantir develops sophisticated software platforms that enable organizations to analyze complex datasets and derive actionable intelligence.
Its flagship products include Palantir Gotham, which helps intelligence agencies identify hidden patterns in diverse datasets for counterterrorism operations. Additionally, Palantir Foundry serves as a central operating system for organizational data. The company recently launched the Palantir Artificial Intelligence Platform (AIP), which integrates large language models to transform structured and unstructured data into AI-readable formats, enabling human and AI-driven tools and processes.
A widening suite of products and an expanding customer base has allowed Palantir to grow its sales from US$595 million in 2018 to US$2.86 billion in 2024. Despite a challenging macro environment, Palantir’s sales growth in 2024 accelerated to 28.8%, up from 16.7% in 2023. Palantir is also profitable, ending 2024 with an operating margin of 10.8% and a free cash flow margin of almost 40%.
Palantir’s growth story is far from over, given it is forecast to expand adjusted earnings per share from US$0.41 in 2024 to US$0.56 in 2025. Moreover, free cash flow is estimated to increase from US$1.14 billion in 2024 to US$1.5 billion in 2025.
However, analysts and investors remain wary of the tech stock’s steep valuation as it trades at a forward price-to-earnings multiple of 136 times and a forward FCF multiple of 120 times.
The bull case for this TSX stock
Brookfield Infrastructure has cemented its position as one of the world’s leading owners and operators of critical global infrastructure networks in 2024, reporting solid financial results and strategic growth across its diversified portfolio.
In 2024, its funds from operations (FFO) stood at US$3.12 per unit, growing 6% year over year. When normalized for foreign exchange impacts, per-unit FFO growth was much higher, at 10%.
BIP successfully achieved its capital recycling objectives, securing US$2 billion in proceeds while deploying over US$1.1 billion of equity into growth projects. It also completed three tuck-in acquisitions, which are expected to contribute more than US$150 million in incremental annual FFO.
“Our base business performed well and is more diversified today than at any point during our history, providing more resilience than ever before,” noted BIP’s leadership.
Looking ahead, BIP has added approximately US$1.8 billion of new projects to its capital backlog at attractive expected returns, with management describing its new investment pipeline as “the deepest it has been in years.”
Based on the company’s conservative 67% payout ratio and positive business outlook, the board approved a 6% quarterly distribution increase to US$0.43 per unit for 2025. This marks the 16th consecutive year of annual distribution increases within or above the target range of 5-9%.
