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Factors that might predict the Check Point Software Technologies share price direction

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·2-min read
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An important question for large-cap investors right now is how a heightened state of geopolitical and economic uncertainty will affect the share prices of companies like Check Point Software Technologies.

Check Point Software Technologies shares are currently trading at $123.9. To predict how the price will move over the next 12 months, it's worth assessing its ability to withstand economic shocks and ride out market volatility.

No-one has a crystal ball, but research shows that stocks that are good quality and have strong momentum can be better placed to handle these kinds of challenges. That's because resilient, cash-generating businesses can be good at compounding investment returns over time. And research suggests that positive trends in price and earnings can often persist.

The promising news is that Check Point Software Technologies scores well against some important financial and technical measures, and has signs of exposure to both high quality and strong momentum...


Why quality can pay off

When it comes to stock analysis, company quality tends to be revealed in high profitability and strong industry-leading margins. These kinds of firms are stable, growing and often have accelerating sales and earnings. They also have strong and improving financial histories with no obvious signs of accountancy or bankruptcy risk.

One of the quality metrics for Check Point Software Technologies is its 5-year Return on Capital Employed, which is 21.0%. Long-term, double-digit ROCEs can be a hallmark of companies with the power to grow very profitably.

Harnessing the power of momentum

Positive momentum trends show up in share prices and earnings growth. You can find the clues in stocks that are trading close to their 52 week high prices and outperforming the market. They’ll often be beating broker estimates and getting forecast upgrades and recommendation changes.

There are signs of this at Check Point Software Technologies, where the share price has seen a 16.8% return relative to the market over the past 12 months. Market volatility and economic uncertainty can be a major drag on momentum, but previously strong stocks can be quick to recover when confidence returns.

In summary, a combination of high quality and momentum can be clues in the search for shares with the potential to deliver solid investment profits over many years.

In good times, these shares can become expensive to buy. But in volatile markets, there may be chances to buy them at cheaper prices.

What does this mean for potential investors?

Finding good quality stocks with strong momentum behind them is a strategy used by some of the world's most successful investors. But be warned: these factors don't guarantee future returns and we've identified some areas of concern with Check Point Software Technologies that you can find out about here.

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