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Why Fortinet Inc. Gained 12.3% in February

By Anders Bylund - Mar 10, 2017 at 1:22PM

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The data security expert crushed analyst targets in the fourth quarter, then charted a course to even stronger results next year. It's a pricey stock, but quite possibly worth every penny.

What happened

Shares of data security specialist Fortinet (FTNT 4.10%) rose 12.3% in February 2017, according to data from S&P Global Market Intelligence.

So what

Let's have a look at Fortinet's stock chart for the month. I think it will clarify things very quickly:

FTNT Chart

FTNT data by YCharts.

Fortinet reported fourth-quarter earnings at the very start of last month, and it was a smashing success story. Both top-line sales and bottom-line earnings came in far ahead of analyst expectations, followed by a strong set of next-quarter and full-year guidance targets. Shares rose 13% overnight on the news, as investors were inspired by a classic beat-and-raise report.

Now what

Fortinet's strength is a wide-ranging product portfolio that covers security aspects of everything from the smartwatch on your wrist to the data center big-iron server that analyzes the fitness data your watch sends in -- and every point of the networks in between. The company calls it a security fabric, which offers stronger data protection than plugging in separate security tools for devices, networks, and servers.

Cloud security, conceptualized.

Image source: Getty Images.

This security model is a perfect fit for cloud computing and the Internet of Things, and Fortinet is enjoying the benefits of customers buying into that targeted sales pitch.

Investors can look back at market-beating returns of 22% so far in 2017, or 29% over the last 52 weeks. The stock isn't exactly cheap, trading at 204 times trailing earnings, but sometimes you get what you pay for. Fortinet is a quality business in a leadership position of a timely market, and it's often worth paying a premium for that combination.

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Stocks Mentioned

Fortinet, Inc. Stock Quote
Fortinet, Inc.
FTNT
$59.13 (4.10%) $2.33

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