The major indices are all trading slightly lower following a choppy but active session on Wall Street, with stocks giving back some of yesterday's gains. The Nasdaq continued its impressive streak of new nine-month highs this morning, extending its breakout for the fourth straight session, but the tech benchmark is quickly getting overbought, together with the leaders of the rally, such as Nvidia (NVDA), Facebook parent Meta (META), Google parent Alphabet (GOOG), and Microsoft (MSFT). On another positive note, the S&P 500 also hit another year-to-date high in early trading with the broad-based index also topping the 4,200 level for the first time since August.
Stock Pick Summary:
Today, we add another promising opportunity for the long term as our portfolio has steadily risen higher over last few months and we look to maintain our dominance.
It provides cybersecurity solutions worldwide. The company offers firewall appliances and software; Panorama, a security management solution for the control of firewall appliances and software deployed on a customer’s network, as well as their instances in public or private cloud environments, as a virtual or a physical appliance; and virtual system upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, and firewall; and DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention. In addition, the company offers cloud security, secure access, security operations, and threat intelligence and cyber security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services.
For its second quarter, the company posted revenue of $1.7 billion – up 26% year over year. That was ahead of Street expectations for $1.65 billion. It was also above its guidance range of $1.63 billion to $1.66 billion. Adjusted, it earned $1.05 a share, a massive jump from the guidance range of 76 to 78 cents. Billings were $2 billion, also ahead of company guidance for $1.94 billion to $1.99 billion. It not only beat expectations in its latest quarter, but lifted its profit guidance for rest of the fiscal year!
With inflation and risk of recession on the business world's mind right now, tech spending has been slowing down. However, cybersecurity is a top necessity as more organizations migrate to the cloud to try to unlock new operational efficiencies. To get more bang for their buck, businesses are turning to companies like our recommendation today, that can bundle many types of security together to help tighten up on cost.
It is also expected to grow its free cash flow margin and generate over 2.5 billion in free cash flow this fiscal year and gives us another reason to add it to our portfolio today.
The stock trades at a high valuation making it susceptible to a decline on any misses, but we are looking few years ahead and expect it to be one of the dominant players in the cybersecurity space!
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