Red Hat: Best Stock In Best Sector

The Fast Money traders are keeping a close eye on Red Hat. Although the stock took a sharp turn lower on Thursday it’s still up about 43% this year.

If you’re not familiar with Red Hat, it’s the world’s biggest provider of Linux software. It also sells maintenance contracts which includes upgrades, help-desk support and bug fixes. Rivals include Novell and Microsoft.

Earlier in the week the company reported a 7% rise in quarterly profits. The impressive results were largely due to strong profit margins that rose to 23% under the scrutiny of its cost-conscious CEO.

In fact, profitability has been improving since last year when the company tapped former Delta Air Lines executive James Whitehurst as its CEO. He has imposed tight cost controls, drawing on experience squeezing costs out of the struggling, low-margin carrier.

"I know how to put a lid on costs where you need to. I've done a lot of that in my life," Whitehurst tells us.

In fact Whitehurst had a lot of interesting things to tell us about his company and how it's positioned going forward. Curious? Watch the video now!

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Trader disclosure: On June 25th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (LM) Call Spread;’ Najarian Owns (PALM) Call Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (MSFT); Finerman's Firm And Finerman Own (FLS), (RIG); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IWM), (IYR), (IJR), (MDY), (SPY), (USO); Seymour Owns (AAPL), (BAC); Seygem Asset Management Owns (FCX), (MOS)