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More data is going digital every day, and companies need to protect it. But how can a company that focuses on firewalls, which protect physical locations, adapt to the world of the hybrid workforce?
In this clip from “Ask Us Anything” on Motley Fool Live, recorded on March 30, Motley Fool contributor Nick Rossolillo explains why he thinks Fortinet ( FTNT -5.28% ) is more than a legacy cybersecurity company and shares one metric investors should keep an eye on.
Nick Rossolillo: I’m going to go with cybersecurity, which is an interesting industry because a lot of these industries we talk about, they create value for the economy. Cybersecurity is interesting because it doesn’t really create value in and of itself. it protects the value that is there. But it’s an incredibly important trend like Demitri especially was talking about with digital transformation. So much data is moving into an environment where it’s connected in some way to a network or the internet at large and so cybersecurity is going to be an increasingly important aspect of an organization’s spend. There’s good reasons why they want to move that data onto a network but they need to keep it safe at the same time.
I’m going with that and I’m going to go over the stock that I don’t think gets enough love around here but I know it’s been a Fool recommendation at some point in the past, Fortinet, ticker, FTNT. A lot of times we call it a legacy cybersecurity company, but it’s not legacy. They do make design hardware called firewalls that protect the physical location and oftentimes we think of that, well, in the remote work era, who needs that? Everybody is working from home. But a physical location is more than just an office building with workers in it. It can also be a factory with machines in it. It could be a data center that controls a cloud-based software service. There’s a lot of things that a physical location could be where a firewall has an application. They’ve also branched out into a lot of software services as well. This is a company that has been growing organically between 20-30% a year and it’s highly profitable over 30% free cash flow margins for several decades now. That’s really unheard of in the cybersecurity industry. This is a tough industry to stay relevant in and Fortinet obviously has cracked the code on that because of their track record, so I like Fortinet in the cybersecurity space.
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