Technology is booming.
Yes, I know the temptation is to think that we’ve “been there, done that” when it comes to technology, but we are in the early stages of the next breakthrough chapter that may be better described as a tsunami than a boom – an unstoppable wave that continues to build at a rapid pace and is dramatically changing the game yet again.
Big Data is one of the fastest-growing tech subsectors. It may not be as “gee whiz” as when smartphones came out, but it is absolutely critical. Big Data is another way of defining the huge amounts of digital information that crosses the Internet and winds up in government and enterprise’s virtual inboxes, servers and workstations on a daily basis.
To make sense of all this data, users need to be able to sort through unimaginable amounts of information. In addition, many regulatory agencies are mandating tougher compliance standards. This means banks, health care organizations and investment funds have to invest in new technologies in order to meet those requirements.
This is just one area of focus for companies that I call “IT Innovators.” Security is another big sector that seems to get bigger every day as we all wonder where the next data breach might come from, and how to prevent the problem in the first place.
What I like about my 3 tech stocks is that they all have game-changing technology that helps them grow fast, and provide solutions to problems both today and into the future.
Here are three game-changing tech stocks (or IT Innovators!) that I like right now.
Game-Changing Tech Stocks: Fortinet (FTNT)
Fortinet (FTNT) specializes in network security, specifically on “unified threat management,” which means the typical firewall has evolved into an all-in-one product that detects and prevents intrusions. The company offers a number of application control and firewall software offerings, but its flagship device is FortiGate, a network security platform that can work for anyone from small offices and retailers to large enterprises and data centers.
FTNT’s most recent results showed strong 17% revenue growth and a nice 20% rise in billings, which means that revenue visibility and demand are both quite healthy. Moreover, management stated that they have been winning business from tech heavyweights, including Juniper (JNPR) and Cisco (CSCO). And while many of the company’s competitors have slowed down, FTNT is steadily growing.
Security spending is important to larger enterprises, especially since there have been several wide-scale cybersecurity breaches and sensitive data theft recently.
Game-Changing Tech Stocks: Akamai (AKAM)
Akamai (AKAM) operates at the intersection of content delivery and network security, and has roughly 135,000 servers across the globe. These servers help its customers – including virtually all of the largest media and video-intense companies in the world like Yahoo (YHOO) , Facebook (FB) and Netflix (NFLX)– bring data faster to the users – people like you and me who are busy downloading videos and photos).
The company says its servers are located on what might be termed the “edge” of the Internet, which means that the servers are located physically close to end users. Since AKAM servers sit on the edge of the network and thus outside of corporate firewalls that are installed on premise or in the cloud, the Kona segment offers what can be thought of as a “first line” of defense against cyber attacks. Akamai can help deflect attacks before they ever make it to the corporate firewall.
This is a defensible niche for the company, given the size and scale of its server footprint and key customer base (comprised of many large companies, though no single customer makes up more than 10% of total revenues). That’s an attractive quality alongside a heavy focus in the fast-growing media segment and continued attention on cybersecurity.
Another reason I like Akamai is because it’s a relatively U.S.-centric tech play, as it gets 70% of its revenues domestically. That’s important in an environment where investors seem to be worried about international exposure and emerging markets.
Game-Changing Tech Stocks: SolarWinds (SWI)
SolarWinds (SWI) has a presence in both virtualization and security, and offers solid profit potential over the next several months thanks to dedicated customers and a growth rate that is already outpacing the overall industry. It is an enterprise software company that sells its products to organizations of all shapes and sizes all over the world, including many Fortune 500 companies.
Its main goal is to help other businesses cut costs and operate more efficiently. SWI does so through good products that cost less than many of its competitors, providing strong value that has resulted in a big and loyal customer base.
The company has built its niche in providing software that helps IT professionals manage all aspects of their firms’ technology – from networks to servers – through its Orion Network Performance Monitor, SWI’s flagship product. The software can also monitor, troubleshoot and repair remotely.
One particularly attractive aspect of the company is that it is a real recession and post-recession success story. It continued to grow through the worst of times, increasing revenues from roughly $60 million before the Great Recession to a run rate of about $300 million today. The company has followed a “buy and build” mentality, which means it has grown both organically and inorganically at double-digit rates thanks to its own product development and strategic profitable acquisitions – a trend that looks set to continue.