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There may not have been a worst time in the entire history of our country for DraftKings (DKNG) to IPO.
The rate of technological innovation in the last decade or so has been
rapid.
As only a few examples, 10 years go none of the following companies
existed.
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Zoom – video conference technology
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Lyft – car transportation/travel
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Juul – e-cigarettes
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Door Dash – Food delivery
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Instacart – Grocery delivery
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Robinhood –Stock trading
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Instagram – Social network
These companies are called “Tech Unicorns.” And they’ve come on the scene
in the last decade. Took over their industries. And transformed the world.
EDITOR’S NOTE
- The term Tech Unicorn means a tech company was founded in the 2000’s+
and then grew to a $1+ billion valuation.
You no longer must leave your house to interact with people around the
world in seconds.
You no longer must go to the grocery store and deal with lines and rude
people.
And you can summon a car to take you places in seconds on your phone.
Most of this was unthinkable 10 years ago.
But now they’re part of our everyday lives.
And they’re becoming even more important as we’re locked in our houses away
from our friends and family during these coronavirus times, we’re now
living in.
In the coming years technology will change even faster with the
implementation of The Internet of Things.
The Internet of Things is a time when almost everything we interact with
daily will have microchips and sensors in it.
These sensors and chips will spit out data to us to help us improve
potentially every aspect of our lives.
From helping get rid of rush hour traffic.
To helping us spot a health issue before it causes major problems in our
bodies.
To spotting potential pandemics before they spread around the globe.
To making sure our food is fresh.
The Internet of Things will hook almost everything in our lives to the
internet.
These will change us and our lives in both positive and negative ways.
The Internet of Things is already being built. But it will accelerate even
more because of our increasing reliance on technology in these coronavirus
and social distancing times we’re dealing with now.
In the coming years and decades there will be many stocks that turn into
huge winners from the Internet of Things.
But I don’t recommend you invest in smaller Tech Unicorns in the hopes of
catching the ride up.
Not because some of them won’t succeed massively.
But because I think it will be almost impossible to spot the winners and
invest in them before they skyrocket. While also avoiding the ones that
fail miserably and go bankrupt.
I want to bet on solid companies over the long term… Ones that have solid
balance sheets and are profitable today.
Not ones “hoping” to earn profits at some undetermined time in the future.
Today I want to show you one stock that will benefit enormously from the
Internet of Things… While also being a great company now.
Why Qualys Is One Of The Best Internet Security Stocks
One area in the Internet of Things most forget to think about it the
security required for all these systems to keep running without getting
hacked.
It seems like every week you hear about a major corporation getting hacked…
Last week it was Twitter.
And before them it was…
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DoorDash
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Quest Diagnostics
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Marriott
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Equifax
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Yahoo
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Target
These are only a few examples of recent hacking intrusions into companies.
And we’re still at the beginning of the Internet of Things.
Imagine when everything from your fridge, to your car, to streetlights, to
shoes… Is on the internet…
The potential for hacking is enormous already and its growing exponentially
every day as more and more devices are hooked to the internet.
This is where cybersecurity company Qualys (QLYS) comes in.
Qualys is a $4.4 billion company that was founded in 1999.
It provides cloud-based security solutions to large corporations,
governments, and small and medium sized businesses.
Some of its clients and partners are as follows…
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Accenture
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Deutsche Telekom
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Fujitsu
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IBM
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Infosys
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Tata Communications
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Verizon
These are some of the largest corporations in the world when it comes to
communication, finance, and technology… All of which require the kinds of
internet security solutions Qualys provides.
Another benefit to Qualys is that by the end of 2020 worldwide spending on
internet security solutions is expected to reach $124 billion.
And by 2026 internet security spending is projected to reach $270 billion
worldwide.
Qualys is one of the largest cloud-based security solution providers so
they’ll be one of the companies to benefit the most in the internet
security industry from the Internet of Things.
Because of its position as a leader in this arena this allows it to produce
huge profits and cash flow…
Over the last 5 years its average operating profit average 17.4% per year.
I look for any company to produce above 10% margins on a consistent basis
to consider as an investment.
And in the last 5 years its FCF/Sales margin averaged 31.8% every year in
this time.
On this metric I look for anything above 5% on a consistent basis.
Both metrics show that not only does it earn huge profits from its
operations. But also, that it has more than enough money to reinvest in
R&D to build out the things necessary to take advantage of the new
technologies to continue dominating the Internet of Things.
Qualys is an amazing company that will benefit enormously in the years to
come… But it does have one problem right now… Its overvalued.
Its current P/E is 63.2.
Its current P/CF is 23.2.
And its current forward P/E is 43.6.
I consider buying companies that have ratios below 20 on all these, so for
now I recommend putting Qualys on your watchlist and buying it when it’s
cheaper.
Wait and be patient to buy its stock to reap the full rewards of owning its
shares.
Conclusion
Qualys is a fantastic company.
It’s a leader in its industry.
It earns huge profits and cash flows.
And it will benefit enormously from the Internet of Things requiring far
more and far better internet security solutions to thwart hackers.
If you’re looking for a great Internet of Things and internet security
stock to own don’t look to buy one of the tiny companies and hope you get a
tech unicorn… Yes, some of them will explode to huge success in time. But
many others will implode and go bankrupt.
It will be near impossible to tell which is which in the coming years.
Be patient and wait until a company like Qualys “goes on sale” and becomes
more fairly valued to buy its stock.
Click here to learn what we think is
The Best Telehealth Stock To Own
.
Click here to learn what we think is
The Best Internet of Things Stock
.
Click here to learn what we think is
The Best Unknown Artificial Intelligence Stock
.
And use the following links to see if you should buy any of the following
companies or not…
Disclosure – Jason Rivera is a 13+ year veteran value investor who now
spends much of his time helping other investors earn higher than
average investment returns safely. He does not have any holdings in any
securities mentioned above and the article expresses his own opinions.
He has no business relationship with any company mentioned above.
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