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Payne's Picks

Is Now the Right Time to Buy Splunk?

By Payne's PicksFOXBusiness

Splunk shares a ‘buy’ if you can handle extreme volatility?

A&G Capital CIO Hilary Kramer, small business expert Susan Solovic, FBN’s Charles Payne, retail analyst Hitha Prabhakar and Penn Financial Group founder Matt McCall on the outlook for Splunk.

Let’s talk about Splunk (NASDAQ:SPLK).

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It was a featured stock on my show on August 28, and right after it went from $45 straight to $60, the target I mentioned that night. Recently it has drifted a little under $55.

It’s a high-flying tech name. It’s an application software, management, big data, cloud, digital intelligence, IOT, IT operations company, they do a lot with Microsoft infrastructure, that’s been a hot company, monitoring security, all of that stuff, plus compliance.

It’s in all the hot spaces. Earlier this year it got ahead of itself, it was up huge with 93 insider sells, 1.8 million shares of stock, and beat a hasty retreat from the all-time high of $106. But the revenues are up $100 million, up 52%...500 new customers: Bass Pro Shops, Chinese University of Hong Kong, Dell, Dropbox and Bank of Portugal. (A pretty wide global breadth of customers  around the world.)

Guidance for the current quarter and full year are ahead of Wall Street operating margins, which I think are going to continue to expand. It’s right around that 50-day moving average, so I'd like to see it hold here. Your next leg to the upside should take it to $60, but this time I’m looking for a breakout to take the stock north of $70.

Remember, it was a $106 stock, I even think one day it gets back there, but it’s very volatile, so we’ll take it one step at a time. It’s good for short term, and also for long term investors as long as you can deal with extreme volatility.


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