IT security stocks remain hot. And among the hot stocks to watch in this industry group, Qualys has entered a buy zone after passing a yearlong cup-with-handle base with an entry of 143.04. Among IBD 50 Stocks to Watch, the midcap growth stock deserves attention to as the Foster City, Calif.-based company sees more demand for its security products from businesses.
The handle is 24% deep, a flaw even among hot stocks that deserve a close look. Plus, that handle is big enough to be a base on its own. Regardless, this a buying opportunity.
If you look at the new cup, with a pivot of 142.94, an additional handle formed in the past week with a 145.60 buy point. The stock is trading near that buy point as well. The relative strength line here hit a new high, which is a positive. Volume was running 32% below its 50-day average in afternoon trading, however.
The cloud-based security and compliance stock is trading well above support at its 50-day and 21-day lines.
Few technology issues deserve to get selected as hot stocks today. Yet Qualys has gotten a boost since Russia invaded Ukraine two months ago. Maintaining IT security risks have been front and center since the war began. Qualys' products and services have been a part of that.
Hot Stocks Today: Qualys' 3-Year EPS Growth Rate Is Strong
The company is expected to report Q1 earnings of 80 cents a share on sales of $113 million. But the annual 2022 estimate is for a decline of 10% on earnings, which is a bit low for an IBD 50 stock. Still, the company has a three-year EPS growth rate of 22%.
Qualys has a perfect 99 Composite Rating and an RS Rating of 94, which has been rising. You want to see this caliber of rating among hot stocks outperforming the general market. QLYS ranks No. 1 in IBD's software and security group, which itself ranks No. 46 out of 197 industry groups.
Separately, CEO Thakar Sumedh has been gradually selling shares of the company over the past month. He registered more than 25,000 shares to sell in February and March. At the current price of shares of around $143, that would come out to over $3.5 million, according to Securities and Exchange Commission reports.
Follow Michael Molinski on Twitter @IMmolinski
