Welcome to ‘Stock Teasers’, where we aim to provide investment research on a wide range of topics. In this edition, Cross-Border Stocks, we spotlight one Canadian stock and one US stock, regardless of sector or size. Let’s dive in!

 Canadian Stock: Vitalhub Corp (VHI)

Vitalhub (VHI) develops mission-critical technology solutions for Health and Human Services providers in the mental health, long-term care, home health, community and social services, and acute care sectors. Their offerings include a wide range of software products designed to improve patient care, streamline workflows, and enhance operational efficiency within healthcare facilities. VitalHub's solutions cover areas such as electronic health records (EHR), case management, mental health management, and interoperability.

In terms of its financials, analysts expect 14% and 50% sales and earnings growth next year, respectively. It recently became profitable with a current net profit margin of 6.5% and a 4% ROE. It is expensive with a valuation of 47.9X forward earnings and 18.2X forward EV/EBITDA.

VHI is an interesting small cap (C$294 million) Canadian name that has seen sales, margins, and free cash flow growing nicely due to the expansion of its healthcare product portfolio, and further integrations into healthcare networks. It has been fairly acquisitive over the years and recently acquired BookWise solutions. Growth has been great and it’s multiple contracted significantly after it achieved profitability in 2022.

US Stock: Palantir Technologies (PLTR)

Palantir Technologies (PLTR) is a software company specializing in data analysis and integration solutions. The company's software is widely used by government agencies, financial institutions, healthcare organizations, and other industries to make data-driven decisions, detect patterns, and gain insights from complex datasets. Palantir's primary product offerings include Palantir Gotham, which is tailored for government and defense clients, and Palantir Foundry, designed  for commercial enterprises. 

In its recent earnings results, PLTR beat both EPS and revenue expectations. Forecasted outlook is very strong with revenue and EPS respectively expected to grow at above 20% for each year till 2026. The company is a big benefactor of AI tailwinds and has long incorporated AI data mining in its product offering. The company has over $4 billion in cash and demand has been extremely rapid over the last year. It is does charge a premium valuation of nearly 75X forward earnings but there are plenty of positives such as: growth, balance sheet, market leadership, large contracts, long operating history, and growing cash flows. The one drawback that investors do not like is the extremely high levels of stock-based compensation.

Looking at its financials, we see price starting to breakout, while valuation remains at similar levels likely due to multiple expansion. PLTR is also starting to see a gain some momentum in terms of beating quarterly EPS forecasts recording back-to-back beats. PLTR was not profitable for its entire history up until 2023, but that swung in a big way and all the signs shows that this should continue.

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Employees, directors, officers, related companies, the i2i Fund and/or partners of 5i Research do have a financial or other interest in PLTR at the time of publishing.