Cramer is a fan of Fortinet

Read the Cramer Mad Money blog tonight on Fortinet being the top pick next week as it debuts with its IPO. While it is always amusing to hear the mainstream media try to describe what security is about, I don’t necessarily disagree with his view that at 9 to 11 dollars a share, the stock is undervalued.

Cramer thinks the secret is Fortinet’s subscription business which he describes as “100 professionals in eight locations worldwide who monitor security outbreak in real time – for a fee, of course. Pay subscribers get the white-glove treatment, and Fortinet gets some seriously sticky revenues, as few people ever opt out. The service accounts for 60% of total revenues and carries a higher margin than Fortinet’s hardware.

Hey I wonder if that is not true of most security appliance vendors who all sell the subscription to rule updates and such.  However, I don’t think the stock is a bargain because of their CFO. Nothing against the Fortinet CFO, but is that what should drive this stock up?  Cramer is right though that when you look at their revenue and bottom line the stock is underpriced and looks like a good buy.

Good luck to Fortinet! Also remember that sometimes a rising tide lifts all ships. Maybe other public security companies will feel the love.