Fortinet (NASDAQ:FTNT)

Demand for cutting-edge cybersecurity is growing throughout the world. The pandemic and accelerated digitization have forced organizations of all types to increase focus and spend on cybersecurity. Organizations that have traditionally been laggards in terms of cybersecurity spend, like K-12 Education and Higher Education organizations, are requiring greater investment. This is a trend that is expected to continue.
Fortinet has a healthy ~$27B market cap (Mid-Cap), giving it solid long-term upside. Fortinet estimates it is operating in a space with a current Total Addressable Market (TAM) of $105B. For comparison, Fortinet is currently about half the size of CrowdStrike (CRWD) which sits at ~$54B market cap. Even with a relatively modest market cap, Fortinet is a winner that I expect to keep on winning and grabbing market share from competitors, especially incumbents. No matter how you slice it Fortinet is a market beater. When compared to ETFMG Prime Cyber Security ETF (HACK) and the S&P 500, Fortinet has handily outperformed both HACK and the S&P 500 coming off the March 2020 lows. Fortinet has also crushed the S&P 500 when measuring across, 1, 3, and 5-year time frames.
In addition to being a winner, Fortinet offers its high upside growth at a reasonable valuation with a PE Ratio of ~55x Which is slightly below the industry average. Along with a reasonable valuation, Fortinet boasts healthy and sustainable margins with a Gross Margin consistently above 75% (78.5% Q4 2020) and an Operating Margin of over 27% for the last three quarters and 29.4% in Q4 2020. The strong margin profile of Fortinet has allowed it to build an enviable balance sheet with around $1.8B in dry powder and zero debt.
The remarkable results of this business are undoubtedly tied to the excellent leadership team. Founded in 2000 by visionary brothers Ken Xie and Michael Xie Fortinet is mission-driven and aligned with investor interests. The Xie brothers still hold a substantial stake in the company( >14%).

Strong fundamentals. Seems to always go up.