The stock market's rebound off its recent lows has some stocks not just surviving, but thriving. The number of stocks hitting new year-to-date highs has been on the upswing - and this week, two notable stocks that are fresh off those bullish milestones are CyberArk Software (CYBR) and Linde PLC (LIN).
While it's encouraging to see more new highs from a market breadth perspective, the question is: Can these high-flying stocks keep soaring, or are they due for a reality check? Let's take a look at what's behind the recent upside, and whether these two stocks have room to keep climbing.
CYBR: Securing Identity and Growth in the Digital Era
CyberArk Software stands out in the realm of identity security, offering top-notch solutions in privileged access management, cloud security, and endpoint security. Their expertise lies in safeguarding critical assets and users across various environments, whether it's cloud-based, hybrid, or on-premise setups.
Earlier this week, CYBR tagged a new high of $188.77, and the stock is now up more than 44% on the year - in line with the strong performance of the broader Nasdaq-100 Index ($IUXX).
Behind the scenes, CYBR's financial game is strong, thanks to the growing demand for its identity security solutions. The Software as a Service (SaaS) and subscription offerings are the real MVPs, bringing in a solid 70% of the total revenue in Q3 2023.
CYBR also reported a narrower-than-expected loss for the quarter, with earnings per share (EPS) of -$0.31 beating the consensus estimate of -$0.48. On an adjusted basis, EPS arrived at $0.42. Plus, revenue rose 5% to $191.24 million, sliding past the consensus estimate of $187.75 million.
Looking ahead, the consensus is calling for continued improvement in CYBR's bottom-line, with 25.7% improvement projected for 2024.
Now, the word on the Street is overwhelmingly positive when it comes to CYBR. The average rating among 26 analysts is a resounding "Strong Buy!" for the stock.
Out of those, 23 are going all in with a “Strong Buy,” one is saying “moderate buy,” and two are suggesting “hold.” With a mean target price of $199.36, these analysts are expecting potential 6.5% upside from the current price, though Citi's new target of $215 implies even higher hopes.
LIN: A Gas Giant With a Solid Foundation
Linde PLC is a key player in the industrial gas sector, boasting a comprehensive portfolio encompassing oxygen, nitrogen, argon, and other essential gases. Its offerings extend beyond gases to encompass cutting-edge engineering and technology solutions, including gas processing plants and hydrogen fueling stations. They've got business interests in more than 100 countries, playing the field in different markets and places.
With a year-to-date surge of 26.5%, LIN has outpaced the S&P 500 Index ($SPX), which is up 17% in 2023. In today's trading, LIN set a new YTD high of $408.96.
Notably, the materials sector is up just 2.75% in 2023. LIN's outperformance of its own sector by more than 20 percentage points, as well as its relative strength versus the broader market, punctuates just how strong its performance has been this year.
At the core of LIN's robust market performance lies its consistent earnings discipline, evidenced by consistently surpassing analysts' EPS estimates over the past four quarters. The third quarter of 2023 marked yet another bottom-line beat for LIN, with the reported EPS of $3.63 comfortably surpassing the consensus estimate of $3.57.
Furthermore, Linde's announcement of a new $15 billion share repurchase program reflects its commitment to returning value to shareholders.
Likewise, LIN stands out as an attractive dividend-paying investment. The stock currently offers a quarterly dividend of $1.28 per share, translating to an annual dividend of $5.10 per share and a yield of 1.27%. The company has paid dividends consistently for over 25 years, earning the stock official “Dividend Aristocrat” status. With a well-covered dividend and a reasonable payout ratio of 36%, LIN's financial stability remains apparent.
Analysts maintain a highly optimistic outlook, with an average "Strong Buy" rating among 17 analysts. Out of this group, 15 recommend a “Strong Buy,” and 2 suggest “Hold.” The mean target price of $430 reflects a potential 6.7% upside from current levels.
Conclusion
Based on the solid earnings performance, bullish analyst ratings, and share price outperformance, both CYBR and LIN are compelling options for investors. LIN provides a steady dividend, ideal for income-focused investors, while CYBR presents a riskier - yet likelier higher-growth option. Investors might find value in adding one or both of these high-performing stocks to their portfolio, given their current strong performance and future potential.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
