When it comes to protecting your firm's computer network, you want to do business with a security software company experienced at dealing with complex corporate systems. There is an outfit in Israel that knows those ropes. Among the thousands of businesses on its customer list are all of the Fortune 100 companies.
Check Point Software Technologies (NASDAQ: CHKP) provides security software used to protect corporate networks. Products verify remote users, control access, block viruses and allow firms to establish virtual private networks (VPN) for secure communications, bandwidth management and enhanced performance. Competitors include Cisco Systems (NASDAQ: CSCO), Juniper Networks (NASDAQ: JNPR) and Symantec Corporation (NASDAQ: SYMC).
The company received some good news last week, when Friedman Billings upgraded the shares from "market perform" to "outperform" and boosted its price target to $28. The broker noted that Check Point was starting to see a re-acceleration in business from its strengthened VPN/firewall product portfolio and believed the company was positioned to benefit from an anticipated surge in endpoint security spending over the next year.
The stock popped above 30/50/90-day moving average resistance on the news and then passed into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers now recommend the stock with three "strong buys," six "buys," 13 "holds" and two "sells." The CHKP Price to Book ratio (3.05), Price to Free Cash Flow ratio (15.32), Sales Growth rate (26.83%), EPS Growth rate (40.74%), Operating Margin (41.04%), Net Profit Margin (41.55%) and Net Income per Employee ($170.1k) compare favorably with industry, sector and S&P 500 averages. Institutions own about 61% of the outstanding shares. The stock is one of those used to calculate the Nasdaq 100 Index. Over the past 52 weeks, it has traded between $18.53 and $25.99. A stop-loss of $21.45 looks good here. Note that the firm is expected to announce Q3 results in mid-October.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Black Friday expected to be strong, no promises for Christmas
Will JPMorgan chief Jamie Dimon be our next Treasury Secretary?
Gold surges to another new high of $1167 per ounce
