Fortinet Stock Set to Soar Even Higher

Fortinet stock’s options can be had at a premium right now

Editor-in-Chief
Jul 2, 2020 at 10:30 AM
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Cybersecurity name Fortinet Inc (NASDAQ:FTNT) has been on a tear up the charts since the broad-market selloff earlier this year. Not only did the equity clear the $20 billion market cap level for the first time ever back in May, but the shares are now up nearly 30% year-to-date. Fortinet is the leading name in its sector, and sports even more potential when surrounding concerns regarding security for the upcoming presidential election. With major support emerging at the 40-day moving average and $130 level, now looks to be the perfect time for bulls to join in on the fun.

To get a closer look at the software and computer services sector as a whole, Schaeffer’s Senior Quantitative Analyst Rocky White broke down a myriad of data into a broad sector analysis. The analysis registers information from 83 different cybersecurity or software stocks, and its latest pull shows an average year-to-date stock return of 13.8% -- impressive long-term outperformance by the sector.

FTNT CotW June25

Short interest on FTNT has dropped off 3% during the last two reporting periods. This now accounts for nearly 4% of the stock’s total available float, or just over two days’ worth of pent-up buying power, at the equity’s average pace of daily trading. What’s more, 54% of the 22 covering analysts carry a "hold" or "strong sell" recommendation, leaving ample room for bull notes moving forward.

What’s more, Fortinet stock’s options can be had at a premium right now. The tech name’s Schaeffer’s Volatility Index (SVI) of 46% sits higher than just 24% of readings from the past 12 months. This means options players are pricing in relatively low volatility expectations at the moment. Also of interest, the equity’s Schaeffer's Volatility Scorecard (SVS) sits high at 80 out of 100, showing that FTNT has tended to exceed option traders' volatility expectations during the past year, a boon for option buyers.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, June 28.

 

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