Institutions find security in Sentinel One stock

The world economy has gone online; there is no going back from this fact. The only question is how to profit from this transition. As more and more players have become dependent on cybersecurity, the World Economic Forum (WEF) is slowly making this an important topic. Today you can get ahead of the curve by investing in Wall Street giants, exposing your portfolio to the best growth story in cybersecurity stocks.

In recent quarters, names like Check Point Software NASDAQ: CHKP AND Fortinet Inc. NASDAQ:FTNT they were perfect ways to surpass all-time highs. Unfortunately, that growth cannot be continued to this day. That’s why portfolio managers of The Goldman Sachs Group Inc. NYSE:GS they are buying quietly SentinelOne Inc. NYSE:S Instead.

Of course, this stock cannot operate alone. Artificial intelligence and appropriate hardware play a significant role in enabling cybersecurity capabilities. Despite this, you will see that markets and institutions still prefer SentinelOne over similar names C3.ai Inc. NYSE:AI AND Dell Technologies Inc. NYSE: DELL.

The industry is heating up

Professional traders, like those at Goldman who picked SentinelOne stock, typically follow a process when they find opportunities. Part of this process is called “top-down” analysis, where we try to understand the macro environment before delving into individual stocks and sectors.

This should sound complicated, but it can be as simple as following the trends of the ISM PMI indices. Starting with production data, the computer industry starts to get interesting.

With a particular focus on the computer and electronic products industry, here’s what you’ll find. After the contraction in December and January, February was a crucial month of expansion and this trend is likely to continue into the next quarter.

That takes care of hardware demand, which has helped names like Dell hit new all-time highs and even prompt analysts for upgrades. But what about the technology side of the equation? This is where the services PMI comes in handy.

After contracting in December and January, the information industry experienced a sudden expansion in February. Reporting a sector bottom can set the stage for future bullish times for SentinelOne stock.

With all the hype around tech stocks today, you can see how the spillover effect hasn’t yet reached stocks like SentinelOne. However, some on Wall Street are quietly placing their bets before Main Street realizes how much upside there could be.

First, earnings per share (EPS) growth is in focus. Some argue that NVIDIA’s rise is already priced into its EPS growth projections of just 9% for the next twelve months. This makes SentinelOne’s 300% projections even more attractive.

Second, you need to evaluate how the market feels about these projections. The saying: “It has to be expensive for a reason” applies here.

SentinelOne Stock: An Easy Buy Today

Both Vanguard Group and Goldman Sachs have bought shares this month. Increasing its stake by 2.1%, Vanguard’s global investment strategy likes how SentinelOne looks for the coming months. Goldman Sachs fared a little heavier, with a 5.7% increase on its investment.

Most recently, Sylebra Capital LLC recently purchased 3.8 million shares of SentinelOne. A multi-million dollar investment before the quarterly earnings announcement speaks volumes; a big rally could be in the making.

These sharks buy stocks with at least double-digit upside potential. Analysts at Bank of America Co. NYSE:BAC see the stock rise to $35 per share, 24% higher than where it trades today. Likewise, Guggenheim analysts expect the stock to reach $32 per share, up 13%.

SentinelOne shares trade at a forward price-to-earnings ratio (forward P/E) of 100x, a whopping 600% premium to Dell. In fact, the entire sector trades at an average valuation of 25x, making SentinelOne “expensive.”

There must be a reason why the market is willing to overpay for this name, and now you know something about it. In the latest quarter, SentinelOne stock posted 42% year-over-year revenue growth, a trend that will likely accelerate now that the industry is heating up again.

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