San Francisco-based web security and content delivery company Cloudflare (NYSE:NET) rewarded its investors throughout most of 2021. However, the tide of sentiment on Wall Street turned against NET stock in the fourth quarter.
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It appears that Cloudflare got caught up in a wave of market rotation out of technology stocks. Seemingly, growth was out of fashion and value became valuable again.
Yet, there’s no need to panic-sell your NET stock just because of the “great rotation.” A compelling argument could be made that Cloudflare offers both growth and value to long-term investors.
Don’t just take our word for it, though. Check the financial data and confirm it for yourself: Cloudflare remains a power player in the cybersecurity-software space.
NET Stock at a Glance
The trajectory of NET stock in 2021 resembled a jet plane on a runway. It went horizontally for a while, but once it took off, it was headed for the clouds.
Amazingly, the Cloudflare share price soared from $70 to a 52-week high of $221.64 last year. As it topped out in November, however, many investors started to rotate out of technology stocks.
Cloudflare isn’t even part of the Nasdaq, but it didn’t matter. Wall Street decided to punish NET stock anyway, sending it to $80 by late January 2022.
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Traders who panic-sold the stock at $80 would soon regret their hasty decision, however. As of Feb. 11, Cloudflare shares were already recovering to $120.
When a stock representing a good company goes down but then starts to turn back up, this is often an ideal time to start a position. NET stock fits this description, and is still trading at an attractive price for investors.
A Most Excellent Year for Cloudflare
Still, Cloudflare will have its doubters and skeptics. Their arguments won’t withstand the fresh data, however, provided in Cloudflare’s fourth-quarter and full-year 2021 fiscal results.
For the worry warts out there, you can relax as Cloudflare achieved record operating cash flow of $40.6 million, as well as positive free cash flow totaling $8.6 million, during the fourth quarter.
Along with the encouraging cash-flow figures, Cloudflare proved that it’s still a powerful revenue generator. Specifically, the company posted fourth-quarter revenue of $193.6 million, indicating a 54% year-over-year improvement.
Furthermore, Cloudflare co-founder and CEO Matthew Prince observed that his company had “a most excellent 2021,” representing a 52% year-over-year increase in revenue growth.
On top of all that, 2021 provided a 71% year-over-year increase in large-customer growth for Cloudflare. Additionally, Prince noted that 2021 was Cloudflare’s fifth consecutive year of 50%-or-greater compounded growth.
A Trustworthy Zero-Trust Platform
Even while Cloudflare posts outstanding financial stats, the company is still taking proactive steps to improve its software products.
As evidence of this, Cloudflare revealed that it has acquired Vectrix, a company that helps businesses enhance the visibility of, and maintain control over, their software-as-a-service (SaaS) applications.
It’s evident that Cloudflare bought Vectrix for a specific reason. Vectrix will enhance Cloudflare One, Cloudflare’s zero-trust platform, by enabling security teams to more easily detect and address inappropriate file sharing, unauthorized user access and other issues.
Vectrix co-founder and CEO Corey Mahan explained, “Everyone uses SaaS applications, from sending emails to managing HR, but simply ticking the wrong box can leave a business’s critical data exposed.”
By integrating Vectrix’s security tools into Cloudflare One, Vectrix is “able to give customers an easy and simple way to control how data from those applications are shared,” Mahan added.
Bottom Line on NET Stock
The Vectrix buyout is proof positive that Cloudflare is continuing to innovate in the cybersecurity space. Meanwhile, Cloudflare’s recent financial statistics point to a company that’s clearly in expansion mode.
All in all, Cloudflare provides an excellent mix of growth and value. With NET stock apparently coiling for a comeback, investors might consider starting a position in Cloudflare, or adding to an established position.
On the date of publication, Louis Navellier had a long position in NET. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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