$FTNT (+0,6%) — The Legacy Play in My Portfolio

Fortinet is the cybersecurity equivalent of a bouncer who not only guards the door but also built the entire club from scratch, with proprietary tools he has designed over decades. Fortinet became famous with its FortiGate firewalls, powered by its custom-made chips, which allow the company to undercut prices through ownership of the value chain.

Over time, the company has evolved and created various applications in the cybersecurity environment, and the best thing is that they can offer clients the entire package – from network security to endpoint protection – without piecing together products from multiple vendors. Simplicity – something every company values and Fortinet perfected.

You don’t need the entire package? No problem. Fortinet’s other strength lies in its flexibility. Whether you want protection for your data center, basic virtual appliances, or completely cloud-delivered FortiSASE, Fortinet has you covered and can customize its product range to your needs. The big obstacle is the crowdedness of the cybersecurity space, where every company needs to prove consistently that it can keep up the pace.

Fortinet is a great one-stop shop for cybersecurity and well-established in the industry, but competition is fierce, which you always need to monitor. I believe in the company and think that we have a nice opportunity on our hands after the recent sell off.

$S (+5,02%)
— The Innovator for the Watchlist

Now we enter uncharted territory. A company I don’t own, even though I find it highly interesting. Funnily enough, it’s very much the opposite of Fortinet, which might explain its appeal: while Fortinet’s empire was built on hardware performance and a fully integrated platform, SentinelOne is a pure-play software assassin that lives in the cloud and on endpoints. Arguably the faster growing part of the cybersecurity sector, though this also comes with the major downside of uncertainty.

SentinelOne’s platform impresses with superior endpoint protection and utilizes AI to prevent, detect and respond to threats automatically. The company is a software-only play that boasts massive growth, though still unprofitable.

I don’t think the investment case for SentinelOne is as straightforward, since the company hasn’t fully established itself yet, but there is a case to be made that this could become one of the cybersecurity leaders in an AI-dominated world. While I am currently on the sidelines on this one, I could imagine an entry around $15.

$PANW (+0,47%)
$NET (-2,5%)
$ZS (+0,08%)

Today was a successful day for my portfolio, as some truly enticing opportunities presented themselves. A few of them seemed just too good to pass up, so I took some money off the sidelines and deployed it efficiently.

A few weeks ago, I mentioned my intention to reduce my cash position opportunistically throughout Q3 and Q4, aiming for <10% by year-end. However, with the current volatility and short-term panic dominating investor sentiment, it’s getting increasingly harder to resist collecting some beat-up names. Two that stood out today: Fortinet ($FTNT (+0,6%) ) and Eli Lilly ($LLY (+2,42%) ).

Fortinet – Cybersecurity, But at a Fair Price

Let’s start chronologically. When Fortinet reported earnings yesterday, nothing seemed off:

· Revenue up 14% YoY

· Billings up 15% YoY

· EPS up 25% YoY

All figures were in line with or beating expectations. Regardless of that, the company maintains rock-solid balance sheet with ~$4.5 billion in cash, a strong operating margin of 33% (non-GAAP) and free cash flow margins of 25-30%. In Addition, AAR growth was exceptional with SASE and Security Operations rising 22% and 35% YoY respectively.

Looks good enough, you might think. The market didn’t think so, judging by the 27% slaughter of the company’s share price.

So, what was wrong with the report? Where’s the fly in the ointment? Mostly due to a disappointing firewall refresh cycle.

Management confirmed that 40-50% is already complete, implying reduced product demand. Apart from that, there wasn’t much to criticize except for guidance that was “merely” in line, which triggered analyst downgrades, citing growth concerns.

But is that in any way enough to justify a >25% sell-off? Absolutely not, let’s consider a few long-term catalysts for Fortinet from here:

· SASE Expansion (rapidly growing cloud-based security platform)

· Security Operations Suite (similar growth through AI-driven threat detection)

· Global Presence (competitive edge in EMs as the No. 1 player, biggest revenue stream comes from EMEA, US just second)

· AI Integration (Fortiguard and FortiAI enhance threat response)

All of that sounds great, but as usual for cybersecurity companies, it’s fair to assume a massive price tag attached to the stock. Though, that’s not necessarily the case. Fortinet currently trades around a 30 Forward P/E ratio, significantly below its historic average, suggesting an attractive entry level.

Considering the industry Fortinet operates in and how cybersecurity becomes increasingly more important, this is the perfect opportunity to get a piece of a stellar company in one of the fastest growing sectors worldwide.

Eli Lilly – Let’s Profit off the Fat

The second buy of the day benefits from the most sustainable macro trend of all – human indulgence. In simpler terms: people overeating, getting fat, developing diseases, needing treatment.

To clarify, I already had a small position in Lilly, which I added alongside Novo Nordisk ($NOVO B (+1,85%) /$NVO (+1,69%) ) last week. My logic is simple: Obesity and diabetes are long-term megatrends, and only two companies dominate the space. So, why would you try to be smarter than the market and bet on just one, if you can own both?

Honestly, I have no idea who is going to emerge as the winner, but I also don’t think that we will necessarily see only one. Both Novo Nordisk and Eli Lilly have their advantages. Novo is an unloved stock, deeply undervalued with heavy turnaround potential, while Lilly is the faster growing, innovative frontrunner. Initially, the ratio between my Novo and my Lilly holding was 2:1, but after Lilly’s stock sold off sharply today, despite another example of exceptional earnings I just couldn’t resist.

What triggered the decline? Results from Lilly’s oral semaglutide clinical trial came out today and to put it in simple terms: Novo’s rival drug utterly obliterated Lilly’s pill in weight-loss. But was that a surprise? Not really. Novo had a head start, while Lilly is catching up. However, I have no doubt that Lilly will eventually develop a similarly effective alternative. Though, I wouldn’t mind a sharp recovery of my Novo shares based on such a triviality.

Conclusion

Let’s wrap it up. Markets are hypersensitive at the moment. Even a minor imperfection in an earnings report can spark a massive selloff. Expectations are brutal, and it’s not unusual to see $100+ billion companies trading like meme stocks.

In conclusion, both Eli Lilly and Fortinet are phenomenal companies, with robust balance sheets, strong growth prospects and long-term catalysts, trading at discounted prices.

As Warren Buffett said, “Be fearful when others are greedy and be greedy when others are fearful”.

Let’s do that and enjoy the returns.