On Thursday, cybersecurity company Fortinet got a positive adjustment to its Relative Strength (RS) Rating, which rose from 67 to 72. The upgrade comes as the company continues to put up strong profit growth numbers, and its stock rises again toward its all-time high, set at the end of July.
Fortinet Stock Prepping For Another Run?
The upgraded 72 RS Rating means that Fortinet stock tops 72% of all stocks for price performance over the past year. It's within reach of a benchmark. Research shows that the market's biggest winners tend to have an RS Rating of at least 80 in the early stages of their moves. See if Fortinet can close the seven-point gap and hit that benchmark.
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Sunnyvale, Calif.-based Fortinet develops what it calls unified threat management systems including firewalls, endpoint and intruder detection capabilities. Among its other key ratings Fortinet stock has a powerful 97 Composite Rating, out of 99. IBD's Composite Rating is a mix of five other key fundamental and technical ratings. Better yet, its Earnings Per Share Rating is a perfect 99.
ETFs, mutual funds and other institutional investors have taken notice too. Fortinet sports a B+ Accumulation/Distribution Rating on an A+ to E scale with A+ excellent and E terrible. The B+ rating shows that funds are buying more of its shares than selling.
Quarter Results Strong, Forecast Not So Much
On July 19, Fortinet stock rose to an all-time intraday high 81.24. In early August the company reported a 58% jump in EPS to 38 cents per share, on 26% higher sales of $1.29 billion. The prior three periods Fortinet posted EPS growth of 65%, 76% and 79%. Sales growth was equally strong over that time period.
However, when it reported last quarter's results they were robust but the smallest gains in a year. And the company was cautious in its forecast for the current quarter, missing analyst estimates As a result, its stock crashed 25% on Aug. 8 to an intraday low 56.10. But it immediately headed higher the next day. Thursday it closed at 63.17, up 1.5% for the day, and its sixth higher close in the last seven trading sessions.
Now is not an ideal time to jump in since it isn't near a proper buy zone, but see if the stock is able to form a base and break out.
Fortinet stock earns the No. 3 rank among its peers in the 34-stock Computer Software-Security industry group. Qualys and CrowdStrike are also among the group's highest-rated stocks.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
The exclusive Relative Strength Rating from Investor's Business Daily tracks market leadership with a 1 (worst) to 99 (best) score. The score shows how a stock's price performance over the last 52 weeks stacks up against all the other stocks in our database.
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