FORTINET INC (NASDAQ:FTNT): A Strong Growth Stock with Breakout Potential

Investors looking for high-growth opportunities often search for stocks that blend solid fundamentals with positive technical setups. The "Strong Growth Stocks with Good Technical Setup Ratings" screen highlights companies showing steady earnings and revenue growth, reliable profitability, and sound financials, while also displaying technical patterns that indicate possible breakouts. This combined method assists investors in identifying stocks with both strong business performance and short-term price momentum.

FORTINET INC (NASDAQ:FTNT) emerges as a notable choice based on this approach. The cybersecurity company has shown steady growth, financial stability, and a technical chart pattern that points to further upward movement. Below, we explore why FTNT meets the criteria for a strong growth stock with a favorable technical setup.

Fundamental Strength: Growth, Profitability, and Financial Health

Fortinet’s fundamental profile matches well with the growth investing strategy discussed in our introductory article. The company’s latest fundamental analysis report reveals several important strengths:

• Strong Growth Metrics

  • Revenue has increased at an average yearly rate of 22.46% over the past five years, with the most recent year showing a 13.83% rise.
  • Earnings Per Share (EPS) jumped 45.66% year-over-year, with a five-year average growth rate of 36.84%.
  • Forward estimates indicate continued growth, with expected revenue and EPS increases of 13.49% and 9.15%, respectively.

• High Profitability

  • Fortinet holds industry-leading margins, including a 30.60% net profit margin and 31.67% operating margin, both surpassing over 94% of its software industry peers.
  • Return on Invested Capital (ROIC) is 30.04%, well above the industry average, showing efficient use of capital.

• Sound Financial Health

  • The company maintains a reasonable debt-to-equity ratio of 0.25 and a solid Altman-Z score of 7.15, indicating low bankruptcy risk.
  • Free cash flow generation is strong, with a debt-to-FCF ratio of just 0.48, meaning Fortinet could clear its debt in under six months using its cash flow.

These fundamentals suggest Fortinet is growing not only quickly but also sustainably, a key factor for long-term growth investors.

Technical Setup: Consolidation and Breakout Potential

Fortinet’s technical outlook, as outlined in its technical analysis report, supports its strong fundamentals:

• Positive Trend Momentum

  • Both short-term and long-term trends are upward, with the stock trading above key moving averages (20-day, 50-day, and 200-day SMAs).
  • Over the past year, FTNT has outperformed 89% of all stocks, rising 85.6% while maintaining consistent upward movement.

• Consolidation Near Resistance

  • The stock has been trading in a range between $98.70 and $108.77 over the past month, showing a period of consolidation.
  • A key resistance zone lies between $105.00 and $106.71, a breakout above which could signal further gains.

• Support Levels Offer Downside Protection

  • Multiple support zones exist below the current price, including a firm area between $101.45 and $104.50, formed by trendlines and moving averages.
  • A pullback to these levels could provide a lower-risk entry point.

The mix of a tight trading range and strong underlying trends suggests FTNT is positioned for a potential breakout, making it an appealing choice for momentum investors.

Why This Combination Matters

Growth investing depends on finding companies with rising earnings and revenue, but timing entries can be difficult. By including technical analysis, investors can:

• Confirm momentum before investing.
• Spot optimal entry points near support levels or breakouts.
• Manage risk by placing stop-loss orders below key support zones.

Fortinet illustrates this method—its fundamentals support long-term growth expectations, while its technical setup offers a tactical chance for short-term gains.

Find More Strong Growth Stocks

If Fortinet aligns with your investment goals, you may discover additional opportunities by exploring our Strong Growth Stocks with Good Technical Setup Ratings screen. This tool filters for high-growth companies with solid fundamentals and actionable technical patterns, helping investors spot potential winners.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.