We recently compiled a list of the 10 stocks that will make you rich in 5-10 years. In this article, we are going to take a look at where Fortinet, Inc. (NASDAQ:FTNT) stands against the other the Stock That Will Make You Rich in 5-10 Years.
Economic Resilience and Surprising Rate Cut Amid Geopolitical Tensions
The US economy grew by 3% in the second quarter, and the stock market hit all-time highs in the third quarter, averting fears of a recession at hand. While the economy has remained resilient for the better part of the year, the US Federal Reserve’s 50 basis point rate cut surprised many analysts.
Jamie Dimon believes the steep cut might be justified as geopolitical uncertainties can potentially disrupt the gains achieved by affecting supply chains and triggering uncertainties and fears in the market.
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Powell and other Fed officials are open to further lowering interest rates after last month’s half-point cut, but there’s market debate on the pace.
Soaring tensions in the Middle East with Israel invading Lebanon and threatening to attack Iran have triggered a layer of uncertainty, which Dimon believes could have a significant impact on the economy. Consequently, the banker believes that the 50 basis point cut could offer the much-needed economic support as inflation continues to drop.
Nevertheless, James Demerit, Main Street Research CIO, believes the upward momentum in the equity markets will persist as the macro environment improves. While valuations appear to have gotten out of hand, there are still opportunities for stocks trading below their fair value as the investment environment improves.
Apart from the magnificent seven stocks whose valuations have gotten out of hand, other stocks are trading at 16 times earnings, which, according to Demmert, is cheap considering the strong fundamentals that support a further rally. Companies that have consistently grown sales and profits should continue delivering regardless of the uncertainties around the US election and soaring geopolitical tensions.
According to Emily Bowersock Hill, CEO of Bowersock Capital Partners, it is time to be upbeat about the market heading into year-end. “The bull market has survived the year’s historically weakest quarter,” said Hill in an interview with CNBC. “It is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending.”
Which Stocks Could Make You Rich in 5 to 10 Years?
When considering which stocks to buy, it’s beneficial to ask, “Which industries are experiencing the most rapid growth?” Despite some sectors facing challenges post-pandemic, many are flourishing, offering abundant opportunities. The global economy is rapidly evolving, with industries like artificial intelligence (AI), healthcare, travel, online retail, cybersecurity, and green energy experiencing significant growth. The AI market alone is projected to reach $407 billion by 2027 (according to estimates from Markets and Markets). The Bureau of Labor Statistics projects that between 2020 and 2030, total employment in the United States will expand by 11.9 million, or 7.7%, to 165.4 million from 153.5 million.
Some of the top stocks that will make you rich in 5 to 10 years are companies that can rally as the global economy grows on the back of favorable monetary policies. Additionally, they include stocks of companies that are leaders in their respective fields and well-poised to benefit from technological changes such as artificial intelligence.
In an interview with CNBC, Savita Subramanian, BofA Securities head, reiterated utilities and large-cap real estate stocks are well positioned to perform heading into year end. Likewise, industrials and financials should receive a significant boost if the overall economy improves.
According to Subramanian, the idea of the Fed cutting is not only liquidity inducing that should benefit the equity market but a move that ends up cutting money market yields. With liquidity slowly moving out of short-term bonds, most of it is ending up in equity markets as investors take note of high-risk reward opportunities at highly discounted valuations. Subramanian believes dividend stocks and growth stocks are well-positioned to generate significant value going forward.
With this economic perspective in mind, let’s start our list of stocks that will make you rich in 5-10 years.
Our Methodology
To compile the list of the stocks that will make you rich in 5-10 years, we sifted through multiple reports and rankings and compiled an initial list of 20 possible stocks that experts and analysts believe have multi-year growth opportunities. We then selected the 10 stocks that were the most popular among hedge funds and ranked them in ascending order based on the number of hedge funds that held stakes in them, as of the end of Q2 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders as of Q2: 42
Fortinet, Inc. (NASDAQ:FTNT) is a cyber-security company that stands out for combining specialized hardware products with its proprietary software to protect networks. Its FortiGate firewall controls more than 50% of the global market share, with a base of more than 500,000 customers.
Fortinet, Inc. (NASDAQ:FTNT)’s largest customer segment, according to management, is large enterprises. That’s important because switching software providers can be expensive for large businesses, which frequently stay with them for years. There are many things to like about Fortinet at the moment, including the company’s expansion into new services with Unified SASE and its large customer base that is committed to its platform.
When Unified SASE is combined with Security Operations and Secure Networking, the company’s other business segments, Fortinet projects that its total addressable market will grow from $150 billion to $208 billion by 2027.
Approximately a quarter of Fortinet’s revenue comes from its SASE category, which is growing quickly. The company’s service revenue increased by 24% year over year in the most recent quarter, and for the next five years, it anticipates compound annual sales growth of 18%.
The company is positioned to benefit from the rise of AI and related data centre infrastructure. According to the company, the secure networking market is expected to grow at an average annual rate of 15% through 2028. By combining automation and machine learning to improve threat detection and security monitoring, Fortinet is also placing a significant bet on its own artificial intelligence capabilities.
There are still many long-term prospects for Fortinet in the cybersecurity market. For instance, Fortinet has benefited from the growing trend of businesses consolidating their security services by expanding its product line to include the Unified Secure Access Service Edge (SASE) service.
Consequently, Fortinet, Inc. (NASDAQ:FTNT) is one of the stocks that will make you rich in 5-10 Years, given the tremendous opportunities for growth as it expands its footprints into various segments. Insider Monkey’s 2Q 2024 data revealed that 42 hedge funds had stakes in Fortinet, Inc. (NASDAQ:FTNT), compared to 44 in the preceding quarter.
Here is what Conestoga Capital Advisors said about Fortinet, Inc. (NASDAQ:FTNT) in its first-quarter 2024 investor letter:
“Fortinet, Inc. (NASDAQ:FTNT): FTNT is the worldwide market share leader in network security firewalls (by units). During the quarter, FTNT reported a significant beat in billings, showing early gains from the strategic pivot to non-firewall solutions (SASE, SecOps) announced late last year. This follows two consecutive disappointing quarters, and the stock has nearly recovered to 2023 highs. While FTNT is still digesting a pull forward of product-led growth, the recovery appears to be on the right track and should drive higher than expected margins in 2024.”
Powell and other Fed officials are open to further lowering interest rates after last month’s half-point cut, but there’s market debate on the pace.
Overall FTNT ranks 10th on our list of 10 stocks that will make you rich in 5-10 years. While we acknowledge the potential of FTNT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FTNT, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.