As the next payslip comes closer, I've been looking at new growth stocks to add to my portfolio. These two stocks are currently trading at a good price and they also have a good chance of growing a lot over the next 3 years.

Palantir (PLTR)

First of all, we have Palantir trading under PLTR. If you haven't heard of Palantir, well, they had their IPO in September 2020. Palantir are a data company that provides a number of products like Foundry, Gotham and Apollo which they sell to government and enterprise clients. The actual details of what those products too are very, very complicated, but in simple terms, they provide data integration. These products help users deal with and process unstructured data which is a really big problem in the IT space right now. In fact, roughly 80 to 90% of all data in the world is unstructured and Palantir is one of the few companies that allows users to tap into that unstructured data. This is really what makes Palantir unique. There are not a lot of companies that do what Palantir does. In fact, there's probably less than 10.

Palantir is still in the early stages of growth and is expected to grow in revenue by about 24% annually while their earnings is expected to grow by 77% annually. Still, Palantir is currently unprofitable and they have lost $520 million US dollars in the last 12 months. They are currently not expected to make a profit until 2024 so at least 2 years from now. However, they have no debt and cash equivalents of about $2.52 billion US dollars meaning that they can continue to run for at least 5 years before they run out of cash so their financial situation is looking solid.

The one problem that I personally see with Palantir is their massive operating expenses. Currently, they are incurring more operating expenses than the revenue that they are generating. They have $1.61 billion US dollars in operating expenses with only a $1.54 billion US dollars in revenue which is really concerning. However, as I said, Palantir is in a very early stage of growth and I'm hoping that they will resolve this soon. Right now, what's important for Palantir is to get more customers, more big contracts and that's really what they have been focusing on. Last quarter, Palantir added 15 net new customers worth between $1 and $10 million US dollars and 19 net customers worth $10 million or more.

Plus, Palantir is currently trading at its cheapest since the IPO! The average analyst price target is $16.28 on a current price of $10.48 which gives us about 53.4% upside. A simple discounted cash flow model also gives us a valuation of $15.33 which is an upside of 46.3%. Personally, I think we can see much, much higher prices for Palantir, but my main point here is that at a price of $10.5 dollars, Palantir is CHEAP and can give you a decent profit.

Sonos (SONO)

Then, we have Sonos trading under SONO. Sonos is a company that design, develops and manufactures multi-room audio products around the world. Chances are you or somebody you know has Sonos products in their living room or bedroom. 2021 was a good year for Sonos as they reported their best results yet. The company isn't massive with a market cap of $3.4 billion US dollars, $1.7 billion dollars of revenue and $149 million dollars in earnings, but it is finally starting to see a consistent growth in both revenue and earnings. Analysts are expecting 23.2% annual earnings growth and 11.3% annual revenue growth, both of which are above the industry average and the US average. The Sonos management actually expects a revenue growth of between 14 and 16% for 2022 along with earnings growth of only 14.9% to 16.2% so hopefully they will gives us some pleasant news. In terms of finances, Sonos has no debt and has a cash equivalents pile of $754 million US dollars, basically meaning that its enterprise value only $2.7 billion dollars. An enterprise value that is lower than the company's market cap is always a good. Also, given that Sonos also has a PE ratio of 22.9 which is slightly lower than its historical average and also a PEG ratio of 1, the company is looking really cheap right now.

Analysts are also revising their revenue expectations for Sonos in 2022 with 7 revisions up and 0 down, but it looks like they are mixed when it comes to earnings with 2 revisions up and 2 revisions down. Still, the fact that they are unanimously raising revenue expectations is a good sign. Plus, Sonos seems like an all-round good business. Good value, good financials. The management also seems to be doing well in terms of effectiveness because Sonos has a 22% Return on Equity compared to the industry average of 19% and a Return of Assets of 10.9% compared to the industry average of 9.7%. That's really good to see because it means that Sonos is capable of putting their money to good use which is what every investor wants to see. Return on Equity and Return on Assets are two of Warren Buffet's favourite metrics so it's good to see that Sonos is doing well there.

Now, the only problem I can see with Sonos is optimistic analyst expectations. There is a chance that Sonos' growth will slow down because of supply chain issue around semiconductors. In fact, we have already seen that although the impact wasn't too bad. Still, it could get worse. Plus, sales could slow down as people finally start spending more on holidays, vacations and so on. Apart from that, Sonos is looking like a really solid pick in book. The average target price is also relatively high with an average estimate of $41.43 dollars on the current price of $26.53 so that's a potentially big upside of 56.2%. My discounted cash flow valuation also gives Sonos a fair value of $87.87 dollars which is really high and an upside of 231%. I'm not sure if we will see prices like that in the next year or two, but it does show that Sonos is likely to give us decent profits if we buy it at this point.

Palantir and Sonos are two of the stocks that I am currently looking into and researching. What do you think? Are you bullish or bearish on them? What stocks are you looking into right now?