CYBR (Long) - Cybersecurity charts are too good right now

Nov 8, 2023

Fundamentals

• I have recently published a trade idea for another cybersecurity stock ( QLYS ) and seems to have become a theme. The cybersecurity sector is rallying on the back of geopolitical tensions and some stocks, like CYBR have put some lovely technical setups
  
• The fundamentals here are not as pristine as in the case of QLYS , but they are still robust
• The revenue growth is strong and has remained robust and consistent; the sales have grown nearly 1500% in the past decade, from 47m to 700m
• The company has a healthy balance sheet with a reasonable level of debt
  
• The valuation is elevated, but that is to be expected for stocks with a lot of momentum. However, here I am attracted more to the technical setup
  

Technicals

• Anyone who has seen my other trade ideas knows that a solid base with a high-volume breakout is a vital part of my analysis. Here, we have a base which has been forming over a three-year period. Usually, the longer the period, the more robust the base.
  
• Last week, the base broke on a release of strong earnings followed by a higher-than-average volume, and most importantly, we have seen follow-through in price, suggesting the breakout likely has legs
  
• Other indicators suggest continuing momentum and the overall sector is also remaining strong and in support of the rally
  

Trade

• The price is a bit far off from the breakout point, so it currently does not offer the most ideal entry point. I would probably suggest waiting for a pullback or at least a consolidation as the stock is slightly extended on the daily.
  
• However, for someone with a more long-term outlook, this price represents an entry as good as any
  
• Suggested stop-loss is at the breakout point. A caveat would be if the stock fell back and through the breakout point.
  
• One should also watch for the performance of the overall industry. For that, I can recommend the cybersecurity ETF HACK

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