Skip to main content

NEW YORK (TheStreet) -- Shares of Red Hat (RHT) - Get Red Hat, Inc. Report were rising in early afternoon trade on Wednesday as the company's "overweight" stock rating and $91 price target were maintained at JPMorgan yesterday, the Fly reported.

The balance between risks and rewards for Red Hat, a Raleigh, NC-based open source software company, is favorable, the firm said.

TheStreet'sChris Versace and Bob Lang of Trifecta Stocks have identified Red Hat as the "Chart of the Day." Here is what Versace and Lang had to say about the company:

Technology stocks have been strong over the past couple of weeks, offering the kind of leadership that can certainly take the entire market higher. We have noted recent solid performances from Intel (INTC), Apple (AAPL), (AMZN) and Facebook (FB), just to name a few.

Still, some areas such as software and cloud services have been showing mixed results. Among those names is Red Hat, a survivor from the past "go-go dotcom" era that has lived on and evolved into a nicely profitable company within a strong niche.

Red Hat's chart shows a stock mired in a range since the Brexit vote (end of June), but it may have burst out ready to move toward higher ground. Monday's surge was on higher turnover and we see a breakout on relative strength, an indicator we have been watching closely.

There is resistance ahead but we believe a good earnings report (after the close Wednesday) will push this stock higher, up toward the $80 level.

Image placeholder title

Chris Versace and Bob Lang "Chart of the Week: Red Hat" originally published on 9/21/16 on Trifecta Stocks.

TheStreet Recommends

Want more like this from Chris Versace and Bob Lang BEFORE your stock moves?Learn more about Trifecta Stocks now here.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rated this stock as a "buy" with a ratings score of B.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and good cash flow from operations. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

You can view the full analysis from the report here: RHT