Seeking Alpha: Check Point Software Offers A Good Risk-Reward Trade-Off

After a tough couple of years in which analysts and investors questioned whether Check Point Software Technologies (CHKP) could maintain its market share against more aggressive up-and-comers like Palo Alto Networks (PANW) and Fortinet (FTNT) and whether the company's prioritization of margin over share was the right strategy, 2013 was a good year for the shares. That momentum has been holding up of late, as although Check Point didn't have a great first quarter, the company has avoided a lot of the negativity that has hit Fortinet, Palo Alto, and FireEye (FEYE) recently.

As a stock, Check Point is a much different proposition than Palo Alto, FireEye, or Fortinet. This company isn't disrupting the market and isn't likely going to be growing revenue at a frequent annual double-digit rate. On the other hand, it has strong market share and a good margin and free cash flow base. I don't see the same overall upside to Check Point as its smaller rivals, but on a risk-adjusted basis, the return is still good enough to make this a worthwhile stock for less risk-tolerant investors.

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Check Point Software Offers A Good Risk-Reward Trade-Off

Seeking Alpha: Imperva's Valuation May Not Be So Ridiculous

I'm no fan of overheated tech momentum stories, but even with Imperva's (IMPV) shares up almost 60% over the past year, I'm not convinced Imperva is overheated. Certainly these are early days for web application firewalls and database-oriented security solutions, but Imperva has already established itself as the only company to address web apps, databases, and file activity monitoring and with appliance, software, and cloud delivery models.

Looking at what companies like Fortinet (FTNT) and Check Point (CHKP) achieved in their early years and the opportunity in securing both structured and unstructured data (as opposed to networks), I'm optimistic that a long-term revenue growth forecast around 20% is not ridiculous. That doesn't make Imperva a notably cheap stock today, but it does make it worth a spot on a watch list given the freak-outs that can drive significant pullbacks in security and enterprise software stocks.

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Imperva's Valuation May Not Be So Ridiculous