January 2023 SentinelOne (S) and Elmer T. Lee Bourbon Pairing

Authors: Allan Maule, James Hatfield

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Website: sentinelone.com

Twitter: @sentinelone

CEO: Tomer Weingarten

Founders: Tomer Weingarten and Almog Cohen

Market Cap at Time of Article: $4B

Current Analyst Recommendations (22 analysts’ price targets median): $22.66, so at its current price of $14.24 this is a solid buy.

Revenue: $115 million (Q3 2022), so up 106% year-over-year!

Insider Ownership: 0.52%. Not ideal. Still, being founder-led does increase our confidence despite this uninspiring insider ownership.

What makes SentinelOne (S) worth your hard-earned money for the next decade or more?

We wrote in our CrowdStrike recommendation that cybersecurity is among the fastest growing markets in the world. We’re still right, as the cybersecurity market is estimated to reach $478.69B by 2030. But in today’s brutal marketplace, you can’t simply throw darts at any publicly-traded cybersecurity firm and expect to see a great return. Instead, you’ve got to look at companies that differentiate themselves and are strategically positioned to grow by offering security solutions no competitor can.

Enter SentinelOne (S). SentinelOne sets itself apart in cybersecurity by automating its entire threat detection process. This means SentinelOne’s platform does not rely on human analysts at all. While this approach might seem unorthodox, mistakes made by the “human element” account for a staggering 83% of data breaches according to the 2022 Verizon Data Breach Investigation Report. That in mind, trusting AI-powered algorithms with your data security doesn’t seem that radical. And as security threats continue to target the bigger remote workforce and suite of cloud-and web-based applications that many companies depend on, SentinelOne’s clients will be unlikely to reduce any security spending. This helps security companies like SentinelOne position themselves as “mission-critical” to their fast-growing customer base.

On the financial side, SentinelOne just had quite a strong quarter in the midst of a market that has had all of us sipping on more whiskey than usual. Their annual recurring revenue was $487 million compared to $237 million this time last year, which is an eye popping 106%. While their total customer count grew a strong 54%, the real good news is they grew larger customers (with ARR of more than $100,000) by 99%. These bigger fish are exactly the sort of customers that a fast-growing company like S needs to focus on, so they’re doing exactly what they need to do there. The weakness of S is that despite rapid growth they are not yet profitable; that said, they did improve their adjusted operating margin by 26% over the last year and have $1.2 billion in cash and equivalents. So they’re in a solid financial position to continue their rapid growth without running out of resources.

Why talk about SentinelOne to all your friends and family?

Because so much of our lives is now in the digital, online world, keeping our personal and professional data safe is critical. We wouldn’t think of leaving the front door to our workplace unlocked when we go home, but too many organizations essentially leave their digital doors unlocked when it comes to information security. Making matters worse, hackers and other bad actors now use all kinds of automated tools powered by AI to try and steal our sensitive information.

SentinelOne faces down these AI-powered bad guys with artificial intelligence of their own. This helps them keep up with the latest threats to protect business data across locations and devices. What’s more, SentinelOne is recognized as a leader in cybersecurity by industry experts like Gartner and Mitre Engenuity. And now that their stock price is relatively cheap compared to their highs last year, now is a great time to invest in S.

How is this company disruptive?

SentinelOne’s disruptive approach to cybersecurity is the automation of its entire threat detection process using AI on an extended detection and response platform that it calls Singularity. This means SentinelOne’s platform does not need human analysts for day-to-day operations, which sets the company apart from other cybersecurity platforms. In addition, SentinelOne operates with a medley of cloud services and onsite appliances (unlike CrowdStrike that is completely cloud-native). This onsite component helps SentinelOne customers continue to protect their systems and data even if the company loses internet connection.

Conclusion

As hackers and other bad actors become more aggressive in their attempts to breach sensitive databases and steal information, IT departments are all looking for ways to stay ahead of new threats. This is great news for SentinelOne, as their automated platform can offer 24/7 vigilance against whatever attacks show up. While SentinelOne is facing headwinds from higher interest rates and profitability hurdles, much of the market uncertainty around this stock is priced into today’s price. We believe this positions S as a great deal for those interested in investing in the thriving cybersecurity sector.

Whiskey pairing: Elmer T. Lee

45% ABV

$34.95

Let’s start by saying this Bourbon is nearly impossible to find, and you have to pay way over retail to get it in most places. The question is, is it worth it to hunt down or overpay? We think you are buying the name because it’s hard to find. Overall, the bourbon has a lightweight mouth feel and is a solid bourbon. Buffalo Trace is the distiller of this bourbon and what’s unique is this is a bourbon named after a person. There aren’t too many bourbons named after people. Wild Turkey has Russell’s Reserve, named after Jimmy Russell, who is still alive. If you can get this bourbon for retail, it’s worth grabbing, but if you have to overpay, we recommend looking elsewhere.

The Nose, Palate, and Finish

Cherry coke, cherry lollipop, cinnamon, and a classic bourbon flavor. It could be considered a standard to judge other bourbons against. It’s easy to drink, and it’s not as bold or hot due to its lower ABV. I prefer a bourbon with a higher ABV and heavier mouth feel. The finish doesn’t last long enough because it’s so light, but it's still a flavor almost anyone who loves bourbon will appreciate.

The Conclusion

With the rarity and popularity of Elmer T. Lee bourbon, most will tend to rate it higher because of its desirability. If you can remain unbiased or taste it blind (meaning you don’t know what it is), then you would probably consider this a strong bourbon but not your ultimate bourbon of all time.

SCORE – 3.75/5