We recently published a list of Jim Cramer’s Latest Portfolio: 10 Stocks to Buy and Sell. Since Palo Alto Networks Inc (NASDAQ:PANW) 4th on the list, it deserves a deeper look.
Jim Cramer in a latest program discussed last week’s market selloff again, saying the notion the broader meltdown was because of “hard landing” fears is “totally false.” Cramer said that it was all related to the Japanese stock market and Yen, and “nothing more.”
“A bunch of money managers took advantage of how you can borrow against Japanese bonds which had a very low interest rate and then have relatively free money which you can put to work in stocks all around the globe, including here (the US),” Cramer said.
Jim Cramer said that small-cap stocks are “trying to come” back. However, he pointed to an “issue” with the small-cap rally. He said that no one actually bought individual small-cap stocks and instead loaded up on ETFs. Investors, according to Cramer, “walked away” when the broader market wavered.
For this article we watched the latest programs on Cramer recently aired on CNBC and picked 10 stocks he’s talking about. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Fund Investors: 78
Cramer was asked about Palo Alto recently. He said the stock is “terrific” and he’d be a “buyer” of the stock.
Strong demand in the cybersecurity industry is boosting Palo Alto Networks Inc (NASDAQ:PANW). Recently, Baird analysts Shrenik Kothari and Zachary Schneider said customers are focused on ROI and increased spending in the industry is benefitting Palo Alto Networks Inc (NASDAQ:PANW).
“PANW has seen this focus on ROI for some time now. Discounts are offered for larger deals rather than smaller ones to help lock in customers and maximize lifetime value. While still early days, initial customer response to new SASE 3.0 capabilities and AI features has been positive,” the analysts said.
They maintained an Outperform rating on the stock and upped their price target to $360 from $340.
DA Davidson also started covering the stock with a Buy rating and added it to its ‘Best of Breed Bison’ category of stocks.
DA Davidson’s Rudy Kessinger thinks Palo Alto Networks Inc’s (NASDAQ:PANW) three platforms will result in vendor consolidation which would be better than other companies. They believe Palo Alto Networks Inc (NASDAQ:PANW) has so far captured only 7% of the market which could reach a whopping $200 billion.
Palo Alto Networks Inc’s (NASDAQ:PANW) biggest strength is its Prisma Secure Access Service Edge (SASE) product, which generated about 50% growth in the fiscal third quarter year over year. Another growth catalyst for Palo Alto Networks Inc (NASDAQ:PANW) is Thunderdome Defense Information System Agency’s zero-trust network architecture.
ClearBridge Large Cap Growth Strategy stated the following regarding Palo Alto Networks, Inc. (NASDAQ:PANW) in its first quarter 2024 investor letter:
“Given our view that the overall market looks expensive, mostly due to mega cap valuations, the low likelihood that technology can continue to deliver well above market returns and an expected slowdown in economic growth, risk management has guided our recent positioning activity. We have been consistently trimming from the select bucket and redeploying into undervalued stable and cyclical names, while also being cognizant of position sizing to maintain the latitude to add to names when prices become attractive.
During the first quarter, we continued to trim IT stocks into strength to manage risk while also adding to high-conviction positions. For example, we trimmed our active weight in Palo Alto Networks, Inc. (NASDAQ:PANW) after the information security software maker lowered its guidance in part due to a new emphasis on providing short-term discounts on product bundles to pursue its consolidation opportunity more aggressively. While this strategy should position the company more strongly in the future, it potentially increases volatility in operating results in the near-to-medium term.”
Overall, On Palo Alto Networks Inc (NASDAQ:PANW) ranks 4th on Insider Monkey’s list titled Jim Cramer’s Latest Portfolio: 10 Stocks to Buy and Sell. While we acknowledge the potential of Palo Alto Networks Inc (NASDAQ:PANW), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PANW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
