• Cloudflare (NET) shows strong technical momentum, hitting new highs on July 1.
• NET has a 100% technical “Buy” signal with impressive recent gains.
• Fundamentals are robust, with projected revenue and earnings growth exceeding 25% and 30%, respectively, over the next two years.
• Some analysts caution that the stock may be overvalued despite this performance. 

Today’s Featured Stock:

Valued at $67.9 billion, Cloudflare (NET)  provides platform protection and accelerates any internet application online without adding hardware, installing software, or changing a line of code.  

What I’m Watching:

I found today’s Chart of the Day by using Barchart’s powerful screening functions. I sorted for stocks with the highest technical buy signals, superior current momentum in both strength and direction, and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. NET checks those boxes. Since the Trend Seeker signaled a buy on May 9, the stock has gained 47.97%.

NET Price vs. Daily Moving Averages:

Barchart Technical Indicators for Cloudflare:

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Cloudflare shares hit a new 52-week high on July 1, touching $196.85 in morning trading.

• Cloudflare has a 100% technical “Buy” signal.
• The stock recently traded at $196.85, above its 50-day moving average of $156.10.
• NET has a Weighted Alpha of +151.09.
• The stock has gained 133.7% over the past year.
• NET has its Trend Seeker “Buy” signal intact.
• Cloudflare is trading above its 20, 50 and 100-day moving averages.
• The stock has made 15 new highs and gained 18.3% in the last month.
• Relative Strength Index is at 78.14%.
• The technical support level is $193.37.

Follow the Fundamentals:

• $67.9 billion market cap.
• Revenue is projected to grow 25.55% this year and another 26.61% next year.
• Earnings are estimated to increase 6.29% this year and increase an additional 30.35% next year.

Analyst and Investor Sentiment on Cloudflare:

I don’t buy stocks because everyone else is buying, but I do realize that if major firms and investors are dumping a stock, it’s hard to make money swimming against the tide.

It looks like Wall Street analysts have very mixed feelings and some major advisory sites think the stock may be priced too high for further price appreciation.

• The Wall Street analysts tracked by Barchart issued 16 “Strong Buy,” two “Moderate Buy,” 11 “Hold,” and two “Strong Sell” opinions on the stock.
• Value Line rates the stock “Average.”
• CFRA’s MarketScope rates the stock a “Hold.”
• MorningStar thinks the stock is 49% overvalued.
• 71,950 investors monitor the stock on Seeking Alpha, which rates the stock a “Hold.”

The Bottom Line:

Cloudflare currently has momentum but may have peaked.

I caution that NET is volatile and speculative — use strict risk management and stop-loss strategies.

Today’s Chart of the Day was written by Jim Van Meerten. Read previous editions of the daily newsletter here.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.