You really must have NET stock on your watchlist

While Americans largely stay at home for health reasons, demand continues to rise for web security and content delivery services, such as Cloudfare (NYSE:REPORT). Investors are taking notice and despite some volatility, NET stocks have been pushed higher.

Source: Various photographs / Shutterstock.com

There are a handful of companies working in this area of ​​Internet operations. Cloudfare, however, has developed a higher profile than many of its competitors.

And its profile, unsurprisingly, increases as its share price moves north. Everyone loves a winner, and in the market, a stock with generally upward momentum from NET typically scores positive notes.

All of this raises the question of whether you should invest in Cloudfare?

Serve as agent

Cloudfare was founded in 2009. The company is headquartered in the beautiful city of San Francisco. Simply put, he’s hired to be a “reverse proxy”For customers, and Cloudfare’s servers handle many of the customer’s customer requests. The term “proxy” is important because the customer’s customers are unaware that Cloudfare is acting as an intermediary.

Cloudfare also offers Internet security services and, because of its proxy role, is at the forefront of denial of service attacks. In other words, the business acts as a shield.

The company’s policy of not judging the content it facilitates or the customers it serves has, over the years, put Cloudfare on the defensive. Responding to criticism, company officials said judgment was not its role.

Some of its clients may be viewed as improper or even outlawed, but Cloudfare insists it adheres to the laws that apply to its business. In addition, the company has abandoned certain customers as its practices evolved.

In addition, Cloudfare offers Internet security software and related services.

A look at NET stock

NET action offers investors a way to remove a layer of the dynamic tech sector and make a behind-the-scenes type game.

Although not visible to the average person, issues related to security and content delivery are very serious for businesses. Their importance increases as the dependence on the Internet increases. And during the novel coronavirus pandemic, sensitivity and safety are magnified.

About 10 years after its founding, Cloudfare took steps to go public on the New York Stock Exchange. The company hit the market in September 2019.

A share of NET stock initially sold for $ 15. The stock hit $ 20 last February and has started to climb steadily as summer approaches. Its 52 week low is $ 15.05, while the 52 week high is a more impressive $ 71.77.

In October, volatility hit the stock. Currently, NET shares are trading around $ 64.

Cloudfare third quarter performance injected some encouraging numbers to the desirability of the stock. For the period ending September 30, the company reported sales of approximately $ 114.2 million, a 54% year-over-year increase.

Although the company is not profitable, Cloudfare reported an improvement in the numbers. According to the company’s report, the adjusted net loss was $ 5.4 million, up from $ 18.5 million in the third quarter of 2019. The adjusted loss per share totaled 2 cents, an improvement from 16 cents there. a year ago.

The company also expects more revenue, as well as a loss in the fourth quarter and for the year. The effects of the continuing pandemic inject “substantial uncertainty,” the company said.

For the full year 2020, Cloudfare forecasts revenues of between $ 422.5 million and $ 423.5 million. The adjusted net loss is expected to be around 13 cents.

The result on NET shares

Cloudfare serves a segment of the technology market that operates in the background but provides essential services to businesses that use the Internet.

As a proxy, the company’s servers reduce the demand on its customers’ servers. Cloudfare also provides a shield, protecting customers from bad actors who seek to hack or interfere with customer operations. It also adds new services aimed at responding to the growing trend of remote working.

NET stock, while valued at a premium, deserves to be considered for a long-term diversified portfolio that is not already too heavy on tech stocks.

If stocks suffer a further decline, NET stocks would also be an attractive value investment at a lower price.

As of the publication date, Larry Sullivan does not have (directly or indirectly) any position in any of the stocks mentioned in this article.

Larry Sullivan is a seasoned journalist in Florida who has covered banking and finance for several years. He is a former investment editor at US News & World Report in Washington DC

Ann J. Cox