Palantir Technologies (NYSE: PLTR) has had a phenomenal start to its life as a publicly traded company, with the stock up more than 150% in just over two months. The data analytics company is well-regarded for its government and spy work, including its rumored help in tracking down Osama bin Laden. It is also now a rather expensive stock, trading at more than 40 times expected 2020 sales. Government IT companies have great potential as the Pentagon and civil agencies increasingly partner with the private sector, but Palantir is hardly alone in positioning itself to capitalize on that potential. Here's why investors would be better off buying Booz Allen Hamilton (NYSE: BAH), SAIC (NYSE: SAIC), and Leidos Holdings (NYSE: LDOS) instead. Defense stock data by YCharts The current leader in intelligence It's hard to find a good comparison for Palantir, but Booz Allen Hamilton is probably closer than anyone. The company has a broad array of government and commercial IT and consulting businesses, with a heavy focus on intelligence. It hasn't always been smooth: Booz Allen infamously was Edward Snowden's employer when Snowden worked at the National Security Agency. But that indiscretion has done little to harm the company's relationship with the Pentagon. Image source: Getty Images. In its most recent quarter, Booz Allen reported revenue up 11% and earnings up 27% year over year, forecasting 7% to 8% growth in future quarters. The stock has been a big winner in recent years, growing three times as fast as the S&P 500 over the last three years, but the shares today trade at just 1.6 times sales. The Booz Allen portfolio is set up well to take advantage of an expected trend of federal, state, and local governments looking to outsource to save money, especially in the face of COVID-related spending headwinds. And its intelligence business should benefit as the U.S. seeks to reduce its physical presence in hotspots like the Middle East in favor of monitoring from afar. A turnaround story whose time has come SAIC, short for Science Applications International Corp., provides IT services, mission support, and project management for a range of government customers including the Pentagon and NASA. It also has a hardware business with contracts to upgrade and modify military vehicles. A lot of its businesses aren't as sexy as hunting down terrorists, but there is a lot for an investor to like in this portfolio. In its most recent fiscal quarter, SAIC reported bookings 2.7 times what it billed, and reported a backlog of $22.6 billion, setting the stage for impressive growth in the years to come, and its free cash flow was more than three times its net income. SAIC is coming out of a period of transition including digesting some sizable deals, and the stock has underperformed the S&P 500 by about eight percentage points over the past three years. That hard work is set to pay off, with the company projecting organic revenue growth of 4% to 5% in the quarters to come. The company has about $22 billion in submitted bids, or chances to win additional work, with about 80% of that new work and not extensions of existing business. Overall, only about 15% of total revenue is up for recompete in fiscal 2022, giving SAIC the opportunity to go on the offensive. SAIC throughout its history has been a cyclical company, and the stock after a few unremarkable years looks like a coiled spring headed into 2021. The biggest name in government IT Leidos Holdings is the largest government IT company, but in the last 18 months it has become a lot more than that. Prior to the pandemic, the company did two billion-dollar deals in a matter of weeks to extend itself into space research and airport security, making it more of a well-rounded defense contractor. Investors are enamored with Palantir in part because of the near-magical feel of its predictive software. There is a lot of magic in Leidos' portfolio too. The company's software was at the helm of an autonomous ship the Navy sailed from San Diego to Hawaii and back with little human intervention, and its Dynetics subsidiary has an Air Force contract to develop "Gremlin" drones able to launch from aircraft and swarm a target largely on their own. Illustration of the Gremlins drones in action. Image source: Dynetics. Leidos, at its core, is still a defense IT company, and it has had a lot of success winning new business. Earlier this year it won a major $7 billion contract to modernize and maintain computer networks for the Navy and Marine Corps. The company has a backlog of more than $30 billion in future contracts, and management has guided for organic revenue growth of 10% to 12% in calendar 2021. The stock has been a laggard during the pandemic, in part because it has disrupted Leidos' typically lucrative healthcare business, including providing medical exams. Overall, it has still outperformed the market over the last three years. These are Palantir's peers There's a lot of debate among investors about how to categorize Palantir, and specifically whether the company should be lumped in with these lower-multiple defense contractors. There's potential for more, but for now these are Palantir's peers. The company in its recent earnings report said the "government sector remains a primary area of focus for our business," accounting for about 56% of total revenue. The government business also grew at nearly twice the pace as commercial. Every company on this list has non-government customers, and some (like Booz Allen) are just as eager to expand there. But all of them, Palantir included, rely on the government to pay the bills. Palantir might, over time, deemphasize government in favor of what could be higher-margin corporate work. But the company's been in business for 17 years and is not there yet. Palantir is a defense stock. And for my money, there are a lot of better options to choose from right now. 10 stocks we like better than Palantir Technologies Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Palantir Technologies Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of November 20, 2020 Lou Whiteman owns shares of Leidos Holdings. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source