Palo Alto Networks (PANW)

He used to own CHKP. Both PANW and FTNT are strong businesses, market leaders in the space and taking market share away from CHKP.

Challenge is that PANW and FTNT are really strong in this industry. Good for the consumer, but may not be good for the businesses in that space. At 46x PE, PANW is really expensive, growth needed to justify that valuation is substantial, high valuation keeps him on the sidelines.

Look at the space as a whole to see if you want to be involved, rather than choosing just one player. Does like the aspect of customer "stickiness" in that once a customer signs up, switching costs are high.

A lot of tech companies are down significantly from highs. 20% is a big number, but it's not vastly larger than peers on a relative basis. Cybersecurity is a desirable area right now, and this is one of the better companies. High growth has to expect more pronounced swings.

Be patient, try to time an entry point. Relatively good value right around here. High quality.

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.