Shernice's stock picks.

$Kratos Defense & Security Solutions(KTOS)$  [Miser] 

$Palantir Technologies Inc.(PLTR)$ 

Kratos Defense focuses on developing innovative technologies for the U.S. military and government, with core businesses including unmanned aerial systems, high-performance satellite communications, and advanced defense technologies. The company integrates artificial intelligence into its systems, enabling drones to operate autonomously and adapt to changing mission parameters in real time.

Although Kratos had faded from investors' attention due to intense competition in the drone sector, Guilfoyle noted that the company has been on an upward trajectory since late 2022. Kratos' stock nearly doubled in 2023 (up 96.6%), rose another 30% in 2024, and surged 16% in just the first 13 days of 2025.

The recent spike in Kratos' stock price is primarily attributed to a major contract with the Pentagon. On January 6, 2025, the company announced a five-year agreement to enhance the Pentagon's hypersonic flight testing capabilities and accelerate the deployment of these technologies to military aircraft. If all options under the contract are exercised, its total value will reach $1.45 billion. Additionally, within a week of announcing this deal, Kratos secured two new contracts totaling $148 million.

In early November, Kratos reported its Q3 financial results, with adjusted earnings per share (EPS) of $0.11, an 8.3% year-over-year decline. Revenue for the same period increased slightly by 0.5% to $275.9 million. The company is expected to release its Q4 earnings report in mid-February, with market forecasts predicting adjusted EPS of $0.10 and revenue of $287.6 million.

As of September 30, 2023, Kratos had $301.5 million in cash, $61.9 million in unbilled revenue, and $158.9 million in inventory, bringing its total current assets to $838.4 million—more than three times its current liabilities of $260.5 million. Guilfoyle highlighted the company's liquidity, with a current ratio of 3.22 and a quick ratio of 2.61, both well above the benchmark of 1, indicating strong financial health.

Through its ongoing innovation in drone and hypersonic technologies, Kratos Defense has regained market attention. With its strong financial position and significant government contracts, the company is increasingly being compared to Palantir, another defense-focused tech giant known for its rapid growth and strategic positioning. Could Kratos be the next Palantir? For investors interested in military technology and artificial intelligence, Kratos presents a compelling opportunity with the potential for substantial long-term gains.