By Michael Cintolo, Editor of
Cabot Market Letter and
Cabot Top Ten Trader
From Cabot Wealth Advisory 7/7/11
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For my stock idea in this issue ... well, it was hard to choose just one. So many stocks have formed good-looking launching pads (some as long as six months) with many breaking out during the past few days. However, now is not the time to get sloppy--many names have been levitating on light volume, which doesn't actually inspire confidence heading into earnings season.
Instead, you should look for the stocks that have great stories, great growth and great volume clues, which tell you that big investors are building positions. One name to watch is
Fortinet (FTNT), which is the leader in the new, fast-growing field of Unified Threat Management. Here's what I wrote in Cabot Top Ten Trader two weeks ago:
"Fortinet calls itself the worldwide leader in Unified Threat Management, a new sector that's growing like mad as companies race to upgrade network security. The company's flagship product, dubbed FortiGate, can provide firewall, application control, intrusion prevention, Web content filtering, antivirus and anti-spam services--all in one device. Simplicity and cost savings are the big advantages, but it also appears that Fortinet's products are better at handling the new network reality, where everyone is connected using a variety of devices. While earnings estimates are a bit low, the company regularly trounces estimates, and we love the trend of accelerating sales and earnings growth. With many clients signed up on a subscription basis (read: lots of recurring revenue), Fortinet's results should continue to impress."
The stock has had a big run since originally breaking out of its first base in August of last year. But shares refused to budge during the correction, and impressively, FTNT has bolted ahead 12 days in a row to new highs on good volume. It's clear that big investors that own shares never let them go, and now they and others are increasing their stakes. The stock is a bit extended here, but that's a good thing if the market is really in the early stages of a new advance.
Bottom line, I think you could buy a little around here, or, hopefully, pick up shares on a normal dip of a couple of points.
Editor's Note: Mike Cintolo is VP of Investments for Cabot, as well as editor of Cabot Market Letter, a Model Portfolio-based newsletter of the best leading growth stocks in the market. It's been four and a half years since Mike took over the Market Letter, and during that period he's beaten the S&P 500 by 13.3% annually thanks to top-notch stock picking and market timing. If you want to own the top leaders in every market cycle, be sure to give Cabot Market Letter a try. Click here.
Michael Cintolo
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Trader
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Trader. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.