Palo Alto Networks (PANW)

Cybersecurity has become such an important area. Governments around the world are looking as it. Huge investments in coming years at government and corporate levels. Strong secular growth. Need has increased because, since Covid, people no longer work in just one spot.

He owns CHKP instead.

Great company, a leader, profitable. Punished because of platform change, it wants to consolidate products from the different sub-sectors. Temporary pullback. Vendor consolidation makes a lot of sense, especially in cybersecurity. High growth, very expensive, but real earnings growth. Be patient.

Cyber threats won't go away. They charge cloud-based subscription services globally to businesses and governments which will pull back spending. But this will be temporary given constant cyber threats. Shares trend above the 200-day moving average. 20% EPS growth rate. Also owns Fortinet.

Are fighting this UnitedHealth computer hack. He feels even more confident in PANW than before.

Sector rotation out of tech including this stock. Continues to weaken, would wait before buying. 

Caters more to small- and medium-sized businesses. Has been around the longest. Closest competitors would be CRWD and ZS, but PANW is more international. Darwin really brings AI to the cloud in cybersecurity. February Q4 reporting beat on top and bottom, guided earnings and revenues down. Bad news already priced in. No dividend.

He sees these filed every day. He's not concerned.

Believe it or not, chart shows a healthy-looking correction. Pretty strong uptrend since 2023. Might get consolidation. Hasn't broken trendline, still higher highs and higher lows. Always good if it touches trendline. Watch for breakdown of the last low and a lower high.

Investors should be interested in value of cyber security due to importance. Question is whether share price is presenting opportunity. Would recommend to buy on weakness. If a long term investor - can buy any time. ~$200 share price is reasonable - would not buy at $300. 

Beat on top and bottom lines for Q4. Lowered guidance for 2024, but also lowered the billings (new business) which was quite a surprise. A generalist in cybersecurity, but also caters to small- and medium-sized businesses. They do wonderfully in the current quarter and then get very conservative. Lots of macro uncertainty. Don't want to have to revise down during the quarter. Better to surprise to the upside than have to come in and apologize. 

Doesn't deserve the 25% haircut. Options plays have to play out. You could step in today with 1/3 of your allotment, and then watch the price action.

You can own so many stocks and he didn't buy cybersecurity. Also, he wonders if and when tech giants like Microsoft, Alphabet and Apple will get into this space. PANW and Crowdstrike have performed well though.

Cybersecurity is mandatory and a universal theme in the market. PANW is in areas of this which are necessity-driven. That said, this and Crowdstrike (he just took some profits) are overbought.

Was upgraded today. Billings remain up for them. Shares are up 27% YTD. They bought $650 million worth of companies to end last year, and he's excited by that. Expects shares to rise further.

Next to semiconductors, cybersecurity is one of the great secular growth areas. Hacks are proliferating. An area you have to own. Cybersecurity covers huge government risk and business risk. Really strong secular growth for years to come.