Over the last year this stock has delivered incredible returns of 186% to its shareholders. The S&P 500 by contrast has returned 22.2% over the same time period. Proofpoint gets an overall momentum grade of 'A+'. It is one of the best performing stocks in the market right now.

Valuation

A stock's performance tells us how it's held up in the past. But what about the future? There are no guarantees ever, but we can get a good idea by looking to the valuation of Proofpoint. This is the second of three tests a stock must pass to become a Best Stock Now.

Proofpoint is currently trading with fairly rich price to sales and price to book numbers. The company is not profitable yet, but sales are growing rapidly. It reported 43% revenue growth in its most recent quarter. The five-year consensus growth estimate going forward is 30% per year. Growth like this is not cheap. I currently have a five-year target price on the stock of $70. I see ample upside potential from here.

Stock Chart

The third and final test is the stock chart test. I like companies and stocks that are flourishing in this current market environment. I hate sideways trends that are languishing. I also despise downtrends.

PFPT 50-Day Simple Moving Average Chart
PFPT 50-Day Simple Moving Average data by YCharts

I use one-year charts to size up stocks. As I check out the technical patterns of this stock over the past one year, I see a stock that is currently flourishing. Proofpoint passes my performance, valuation and stock chart test.

Gunderson Stock Grade

Out of 3,836 stocks in my Best Stocks Now database, Proofpoint currently comes in at #56 and earns a Gunderson stock grade of 'A'.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Clients of Gunderson Capital Mgt. are currently long this stock. You can follow me on Twitter for a change in my opinion of Proofpoint.

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