A 'Red-Hot' Tech Play?

Wednesday, 23 Jun 2010 | 6:30 PM ET

Following an earnings beat, shares of software company Red Hat lifted higher Wednesday to trade at levels not seen since 2000.

The Raleigh, N.C.-based company produces Linux software, which competes with Microsoft's Windows and boasts the New York Stock Exchange as a customer. Business should continue to grow, CEO Jim Whitehurst told the Fast Money desk from an investor meeting in Boston Wednesday, adding that many new projects are coming. RHT priced the euro at 1.22 and is seeing a lot of stregth in the European market.

But RHT expects two catalysts for the stock in the next year, says Whitehurst: Stregth in the back-end of the year and the move to cloud computing. RHT unveiled a new cloud computing product Wednesday.

What's the Trade?

It continues to go higher, says Guy Adami. While you might not like the valuation, says Tim Seymour, its P/E is 69.53.

"You're buying red hot, when you buy Red Hat," says Seymour.

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