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Stocks R / RedHat Software

URL:  https://boards.fool.com/analyst-comments-29623903.aspx

Subject:  Analyst comments Date:  10/24/2011  3:56 PM
Author:  newsreporter Number:  9057 of 9070

5 Rocket Stocks to Buy at End of October
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Red Hat has made leaps and bounds in the last five years. The enterprise software firm has more than doubled the average industry growth rate over that period, clocking in at an annualized 27 percent increase versus just shy of 12 percent for other software firms. More surprisingly, Red Hat's done it by selling open source software — software whose code is freely available to the public.

Rather than focusing on the software itself to generate revenues, Red Hat has built an enviable business by selling enterprise clients on the services and solutions needed to implement that open source software on its machines. That mainly comes in the form of training, support and consulting.

Competition in Red Hat's market is fierce, but Red Hat's growth hasn't been meaningfully challenged in the last several years. Now that investors have become more comfortable with the firm's unique business model, shares could gain some extra upward traction.

Financially, Red Hat's model has paid off in spades. The firm carries around $1.4 billion in cash and investments on its balance sheet — and no debt. In other words, around 16 percent of the company's market capitalization is paid for in cold hard cash. That sort of liquidity should help Red Hat surmount any challenges that come its way in the short term.

We're betting on shares this week.

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