Here’s Why You Should Buy the Dip on Tenable Holdings

Today, we’ll be taking a look at Tenable Holdings (NASDAQ: TENB). This $3.3 billion market cap company is in the business of vulnerability management. In essence, it provides the tools and platforms that allow enterprises to stay aware of their cyber exposures — and fix them.

Our quant rating system tracks roughly 4,600 stocks, and evaluates them based on 115 proprietary factors. The top 5% are given a Zen Rating of A — and those stocks have provided an average annual return of 32.52% since the early 2000s. At present, TENB shares rank in the top 3% — so they’re in elite company. 

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With the unstoppable march of digitalization and the recent advent of artificial intelligence, there’s quite a lot of demand for what Tenable sells — and it shows. Now, let’s get into the nitty gritty about what makes TENB so great. 

Your first step is to look at the 7 key areas that point toward prolonged potential gains. 

Each Zen Rating is a composite of 7 Component Grade ratings, which cover a stock’s strengths and weaknesses in various categories.

Let’s take Growth, for instance. This Component Grade rating takes into account 22 factors, such as sales and EPS growth, profit margin improvement, and cash flow momentum. TENB has seen a 3.4% improvement in terms of profit margins, coupled with some impressive EPS growth, so it ranks in the top 2% in terms of this category.

What exactly do we mean by impressive? Well, the company has delivered 18 earnings beats in a row. Let’s take a look at the year-over-year (YoY) EPS growth in the past 4 quarters — 31.25%, 9.68%, 44%, and 64%.

Despite such impressive results, the stock hasn’t gone meteoric. TENB is down roughly 29% on a year-to-date (YTD) basis, and has lost approximately 3.6% in value since the latest earnings beat, on account of profit taking. When it comes to the Value Component Grade rating, the stock ranks in the 80th percentile — equivalent to or better than 80% of stocks, so, in other words, in the top 20%.

In fact, Tenable Holdings is also part of one of our exclusive, 7-stock-strong Zen Strategies portfolios. It has found a place in our Buy the Dip strategy, which has an all-time annual return of 35.51%. If TENB has piqued your interest, you might want to check it out to find other stocks with strong fundamentals that are trading at discounts.

Back to our regularly-scheduled programming. All of the points in favor of TENB haven’t gone unnoticed — based on the coverage of 12 Wall Street analysts, the average price target sits at $37.58, and implies a hefty 35.87% upside. The Street-high forecast, at $45, implies a 62.69% upside.

As we mentioned right off the bat, Tenable Holdings operates in a space that is poised to benefit from current trends. It belongs to the Software Infrastructure industry, which has an Industry Rating of B — and it’s the 4th highest-rated stock within it. 

The last order of business for today is the balance sheet. With plenty of operating cash flow to service debt, stable levels of debt, and a solid degree of short-term assets, TENB ranks in the top 17% with regard to Financials.

So, all in all — we have a stock in a budding industry, with solid fundamentals, a proven growth trajectory, a strong balance sheet, a good valuation, and Wall Street’s seal of approval. Best of all? TENB is trading quite close to its 52-week low — and while the long-term prospects are certainly the main appeal, we might see a bounce off of key support in the short-term.

—> Click here to research TENB. If you’d like to find more stocks with solid fundamentals trading at a discount, take a look at our Buy the Dip strategy.

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