It’s no secret that I’m a big fan of the security space; it’s a rapidly growing and relatively new industry with plenty of upside potential.
I actually pointed to the security space as an example of an entire new and quite strong sector that the U.S. has created since the Great Recession — one of many reasons I remain bullish on domestic stocks long-term, despite recent volatility.
Because I’m so bullish on security, there are quite a few names that I’m a fan of. One that doesn’t get discussed quite as much, though, is a company called Zix Corporation (ZIXI), which offers email encryption, email data loss prevention and “bring your own device” security.
There are quite a few things to like about ZIXI stock, but the first has to be its wide-ranging customer base. Zix Corporation — often called ZixCorp for short — has a nice mix of government and commercial customers.
For example, it serves organizations in the healthcare, financial services, insurance and government sectors. These include federal financial regulators, such as the Federal Financial Institutions Examination Council; divisions of the United States Treasury; the United States Securities and Exchange Commission; one in four United States banks; more than 30 Blue Cross Blue Shield organizations; and one in every five United States hospitals.
Not too shabby.
ZIXI Stock Showing Strong Growth
That diversification had been paying dividends for the company already.
In the first half of the year, the company set a record for number of orders, thanks in part to an 11% year-over-year orders increase in the second quarter. Earnings matched analyst expectations and the company reaffirmed its full-year guidance.
Meanwhile, shares of ZIXI stock are up more than 25% over the last year, including a 24% year-to-date climb — especially impressive considering, once again, the state of the broader market. The S&P 500 is more than 4% in the red since the start of January, while the Nasdaq Composite is hardly faring better at just 2.3% in the black.
Even after that run, though, ZIXI stock looks well priced. At just $4.50 per share, you can pick up ZIXI stock for just 18 times estimated 2016 earnings. That’s especially appealing considering the company is slated for impressive 20% growth per year longer term — 5 percentage points better than the industry average and nearly triple the S&P 500’s average.
More specifically, earnings are expected to expand by 31% in 2016 alone … on top of this year’s expected 27% growth.
No wonder so many analysts agree about Zix Corporation’s promise. The consensus price target is $6 — a whopping 33% higher than the current price even after the stellar run of the past year. Meanwhile, some analysts think ZIXI stock could go as high as $6.25, which would translate to nearly 40% gains.
Add it all up, and you don’t just have a great stock to buy — you have a great recipe for finding other, similar winners. Start with a strong industry, then look for the strongest individual companies within it.
Zix Corporation is a prime example.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
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