There are a lot of bad guys online!
Check Point Software Technologies is a pure-play cybersecurity vendor. The company offers solutions for network, endpoint, cloud, and mobile security in addition to security management. Check Point, a software specialist, sells to enterprises, businesses, and consumers. At the end of 2019, 46% of its revenue was from the Americas, 42% from Europe, and 11% from Asia-Pacific, Middle East, and Africa. The firm, based in Tel Aviv, Israel, was founded in 1993 and has about 5,000 employees.
Check Point also offer a VPN service which has seen a 7 fold increase in traffic during the recent pandemic. Demand for their technical services increased 20% due to the volume of staff working from home.
So why do I like Check Point? Well, apart from the above the financials look solid.
They are currently running a gross margin of 89% and net earnings are at an impressive 41%. There is no debt, with turnover, profits and EPS increasing year on year. Cost of sales and R&D have remained steady of the last 7 years. One of the biggest positives is the sheer amount of stock they are buying back year on year. They seem determined to reduce shares in circulation which, in theory, will push the share price up.
Check Point weren't immune to the recent drop in stock prices falling from $119 down to $80. It is currently trading at $106.
With the solid financials and the increased demand in services I can see the stock price surpassing the high of $119 over the next few months. I believe the demand for their services will continue to increase as businesses adjust to the world post covid 19. As I stated in my Zoom blog, a lot of businesses are adopting a work from home policy on a rotating system with staff. This will keep the demand up for cybersecurity solutions in the foreseeable future.
I currently hold a position in Check Point. This is not investment advice and purely my opinion of the company.