Could Qualys Stock’s Cash Flow Spark the Next Rally?
We think Qualys (QLYS) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
The stock is available at a significant discount to its 3-month, 1-year, and 2-year highs.
QLYS Has Strong Fundamentals
- Cash Yield: Qualys offers an impressive cash flow yield of 10.4%.
- Growing: Revenue growth of 10.1% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: QLYS stock is currently trading at 39% below its 3-month high, 47% below its 1-year high, and 52% below its 2-year high.
Below is a quick comparison of QLYS fundamentals with S&P medians.
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| QLYS | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Systems Software | – |
| Free Cash Flow Yield | 10.4% | 4.3% |
| Revenue Growth LTM | 10.1% | 6.9% |
| Operating Margin LTM | 33.2% | 18.6% |
| PS Ratio | 4.4 | 3.3 |
| PE Ratio | 14.8 | 24.4 |
| Discount vs 3-Month High | -39.3% | -7.9% |
| Discount vs 1-Year High | -46.7% | -10.9% |
| Discount vs 2-Year High | -52.4% | -13.5% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While QLYS stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. QLYS fell about 30% during the 2018 correction, nearly 29% in the Covid pandemic sell-off, and got hit even harder with a 37% drop in the inflation shock. These aren’t minor dips by any means. Sure, QLYS has solid fundamentals, but history shows it’s not immune when the market turns volatile. Even stocks with strong setups can take a pretty steep hit when investors get jittery. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read QLYS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
If you want to see more details, read Buy or Sell QLYS Stock.
Other Stocks Like QLYS
Not ready to act on QLYS? You could consider these alternatives:
These stocks have positive revenue growth, high free cash flow yield, and are trading at a meaningful discount to 3M, 1Y, and 2Y highs.
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have resulted in average 6-month and 12-month forward returns of 25.7% and 57.9% respectively, with win rate (percentage of picks returning positive) of above 70%.
Portfolios Over Individual Stock Picks
Stocks can jump or crash, but long-term success comes from staying invested. The right portfolio helps you ride gains and cushion single stock drops.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.