NEW DIRECTIONAL CALL PLAYS
Palo Alto Networks, Inc. - PANW - close: 104.68 change: +3.80
Stop Loss: 99.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.1 million
Entry on October -- at $---.--
Listed on October 21, 2014
Time Frame: 4 to 5 weeks
New Positions: Yes, see below
Why We Like It:
Customer data mining is big business. It doesn't matter of the company is online or a bricks and mortar store they want to know all they can about you. Who are you? How old are you? What zip code do you live? They track your purchases and store your credit card data.
Last year retail giant Target (TGT) disclosed a cyber breach that affected up to 110 million customers to potentially having their credit card data stolen. Months later, Target's president and CEO resigned over the fiasco. Target isn't the only one being targeted.
Several weeks ago banking titan J.P.Morgan Chase (JPM) disclosed that 76 million personal accounts were at risk and seven million small businesses were exposed in a recent cyber security attack.
The list continues with recent cyber security hacking victims including Neiman Marcus, Michaels, P.F.Chang's, Albertons, Supervalu, Home Depot, Kmart, Dairy Queen, and the University of Maryland. Meanwhile, the number of cyber attacks on small business doubled last year.
According to USA Today the U.S. government just warned corporate America that cyber thieves have stolen more than 500 million financial records in the last 12 months.
Sadly it's only getting worse. The Justice Department called the online landscape for cyber threats and hacking extremely dangerous. They used the term "pre-9/11 moment" suggesting that any day now someone could launch a massive cyber attack. The government is worried about protecting our infrastructure and electrical grid. Corporate America wants to protect their data (and your data). That's why cyber security is big business and getting bigger.
PANW is making a splash in the security world. The stock IPO'd in 2012 and while it has been a rocky ride so far the company seems to have found its groove. Founded in 2005 and headquartered in Santa Clara, California, PANW describes their company as, "leading a new era in cybersecurity by protecting thousands of enterprise, government, and service provider networks from cyber threats. Unlike fragmented legacy products, our security platform safely enables business operations and delivers protection based on what matters most in today's dynamic computing environments: applications, users, and content."
More than 70 of the Fortune 100 companies use PANW's products and services. In 2013 PANW saw revenues grow +55% year over year, outpacing their rivals. They have added more than 1,000 customers per quarter for the last ten quarters in a row. PANW most recently reported earnings on May 28th and said it was their "highest rate of new customer acquisition in our history and now serve more than 17,000 customers."
Another important event last quarter was the settlement of a three-year patent lawsuit with rival Juniper Networks (JNPR). Resolving this issue has removed a significant black cloud over PANW.
The market's recent volatility has generated some big swings in PANW. Yet there was no follow through after PANW broke down under its 50-dma. Right now PANW is soaring with a six-day bounce back toward its all-time highs. The relative strength is encouraging.
Today saw shares of PANW spend over half the session consolidating sideways in the $104.00-105.00 zone. A breakout past $105.00 could be our next entry point. We're suggesting a trigger to buy calls at $105.25.
Please note I do consider this a more aggressive trade since PANW is already up more than 10% from its October lows and shares can see some big intraday moves. PANW is expected to report earnings in late November so we'll most likely exit prior to their announcement.
Trigger @ $105.25
- Suggested Positions -
Buy the DEC $110 call (PANW141220C110) current ask $5.70
Option Format: symbol-year-month-day-call-strike