CyberArk Security: Buy CYBR Now for Great Value

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On and off the chart, CyberArk Security (CYBR) looks like a solid holding — and one made more secure using a low-cost, limited-risk CYBR bull call spread.

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Over the course of the past six months, CYBR has fallen just over 50% from its June all-time-high of $76.35. That’s a steep correction, but the decline in shareholder value still doesn’t necessarily mean CyberArk is cheap.

However, a forward P/E of 43, a debt-free balance sheet and year-over-year earnings growth of nearly 105% do build a case for owning shares of CYBR.

CyberArk has seen double-digit sales growth, with revenues rising 43% year-over-year in Q3. CyberArk has also been a consistent grower for more than five consecutive quarters and can claim having 40% of the Fortune 100 as clients.

CyberArk has also differentiated itself from other cybersecurity outfits. The company’s focus is on privileged account security, the target of 91% of all cyberattacks.

And, unlike many niche security markets, CyberArk’s expertise is within a growth area of cybersecurity. This means the company should continue to flourish as spending from companies at risk of threats like spear phishing continues to rise.

CYBR Stock Weekly Stock Chart

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Source: Charts by TradingView

If you’re still in need of convincing, the deep correction of just more than 50% in CYBR is now showing strong pattern evidence and support, suggesting a reversal and emerging uptrend may be close at hand.

The weekly view of CYBR shows shares have been successfully testing the 62% retracement level from its all-time-low to cycle high over the past four months after an aggressive, corrective plunge from CyberArk’s all-time-highs.

The failure of CYBR to push decisively below Fibonacci support is viewed more favorably as the stock has also managed to complete a two-step or mirror move pattern with leg CD matching leg AB in dollar terms.

Also, the lengthy testing in CYBR has established an undercut double-bottom pattern. That bullish formation is now followed by a lower high double-bottom which just completed with last week’s doji candlestick and what could be the start of a fresh uptrend.

CYBR Stock Bull Call Spread

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Source: Charts by TradingView

The accompanying volatility chart suggests premiums are on the affordable side of CYBR’s trading range. As such, a long call is tempting to consider. This strategist, however, prefers a bull call spread.

Given a volatile overall market and the opportunity to hedge volatility and time decay risks, using a bull call spread in CYBR is simply more prudent and offers a decided edge over the long call, all things considered.

Reviewing the CYBR stock options board, modest liquidity and strike offerings make the available choices limited, but the January $40/$45 bull call spread for $2.00 or less is attractive.

The spread breakeven of $42 in CYBR compares to an outright January $40 call breakeven of $43.10 and a reduction of 35% in the overall premium paid per contract with the call fetching $3.10 mid-market.

This CYBR stock vertical spread isn’t going to build profits as quickly as an outright call if a rally occurs sooner rather than later in the contract’s lifetime. But given the spread’s described protective features, that portfolio security is worth the risk.

Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT

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The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2015/12/cyberark-security-secure-value-now-buy-cybr/.

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