Fortinet (FTNT Quick QuoteFTNT - Free Report) is one stock investors should consider adding to their portfolio to shrug off the current highly volatile market environment and benefit from its upside potential.

Wall Street has been witnessing high volatility since the beginning of 2022 due to multiple factors, including the pandemic, rising inflationary concerns, increasing crude oil prices and a shift in Fed’s policy to a tougher-than-expected line. The ongoing Russia-Ukraine war increased worries for investors about the global economic recovery.

The aforementioned global macroeconomic and geopolitical uncertainties are likely to continue weighing on investors’ sentiments, which can result in more volatility in the U.S. equity market. Year to date, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have plunged 8.6%, 32.9% and 19.3%, respectively.

However, this sell-off in the broader equity market has led to a massive correction in several technology companies’ stock prices, which are currently available at an attractive valuation. In our opinion, Fortinet is one such company that has seen a massive correction YTD.

Why Should You Bet on Fortinet?

Fortinet’s stock has plunged 32.2% YTD. As a result, FTNT stock currently trades lower than its 52-week high, which reflects its potential to go upward. The stock’s closing price of $48.73 on Dec 23 is 34.5% lower than the 52-week high of $74.35 attained on Dec 29, 2021.

With this correction in the stock price, Fortinet currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-earnings multiple of 35.28X compared with its five-year average of 116.60X.

Additionally, amid the ongoing economic and financial instability, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.

Apart from having solid fundamentals, Fortinet has the favorable combination of a Growth Score of A and a Zacks Rank #2 (Buy).

Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 14.6%. Additionally, FTNT stock has an impressive long-term earnings per share growth expectation of 18%.

The Zacks Consensus Estimate of $1.15 per share for 2022 earnings suggests growth of approximately 43.8% from the year-ago period. For 2023, the consensus mark for earnings is pegged at $1.38, indicating a year-over-year increase of 20.6%.

Fundamental Drivers

Fortinet is a provider of network security appliances and Unified Threat Management (“UTM”) network security solutions for enterprises, service providers and government entities worldwide. Its solutions are designed to integrate multiple levels of security protection, including firewall, virtual private networking, antivirus, intrusion prevention, web filtering, anti-spam and wide area network acceleration.

Fortinet is benefiting from the rising demand for security and networking products amid the growing hybrid working trend. Moreover, the ongoing conflict in Ukraine and sanctions imposed on Russia may result in an increase in cyberattacks as Kremlin might use it as a tool to put pressure on western countries to ease sanctions.

It is also benefiting from robust growth in Fortinet Security Fabric, cloud and Software-defined Wide Area Network (“SD-WAN”) offerings. The market research firm, Future Market Insights, predicts that the market size for SD-WAN solutions could reach $53.8 billion by 2032 from an expected $3.4 billion in 2022, indicating a CAGR of 31.6%. As there are only a few vendors who offer security and SD-WAN solutions, FTNT is well-positioned to capitalize on increasing opportunities in the market.

Moreover, continued deal wins, especially those of high value, are a key driver. Higher IT spending on cybersecurity is expected to aid Fortinet in growing faster than the security market. Also, a focus on enhancing its UTM portfolio through product development and acquisitions is a tailwind for Fortinet.

Other Stocks to Consider

Some other top-ranked stocks from the broader technology sector are Celestica (CLS Quick QuoteCLS - Free Report) , Zscaler (ZS Quick QuoteZS - Free Report) and Blackbaud (BLKB Quick QuoteBLKB - Free Report) . Celestica sports a Zacks Rank #1 at present, while Zscaler and Blackbaud each carry a Zacks Rank #2.

The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 60 days. For 2022, earnings estimates have moved up 9.4% to $1.86 per share in the past 60 days.

CLS' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11.8%. Shares of the company have declined 2.4% YTD.

The Zacks Consensus Estimate for Zscaler's second-quarter fiscal 2023 earnings has been revised 3 cents upward to 29 cents per share over the past 30 days. For fiscal 2023, earnings estimates have moved up by 6 cents to $1.23 per share in the past 30 days.

ZS’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 27.3%. Shares of the company have declined 66.1% YTD.

The Zacks Consensus Estimate for Blackbaud's fourth-quarter 2022 earnings has been revised southward by 3 cents to 58 cents per share over the past 60 days. For 2022, earnings estimates have moved upward by 4 cents to $2.59 per share in the past 60 days.

Blackbaud's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 4.9%. Shares of BLKB have slumped 26.2% YTD.