The 7 Best Cybersecurity Stocks to Buy Now | Investing
Over the last 25 years, the cybersecurity industry has grown from virtual obscurity into one of the most important and fastest-growing industries in the world.
In the early 1990s, cybersecurity was in its infancy. The internet – then known as the World Wide Web – had not yet been fully adopted as a business, data and communications tool by either businesses or the public.
When things began to change, they changed fast. E-commerce was born with the founding of companies like Amazon.com Inc. (ticker: AMZN) in 1994 and eBay Inc. (EBAY) in 1995. The first widely used search engines emerged when Yahoo! was founded in 1994 and Alphabet Inc. (GOOGL, GOOG), more commonly known as Google, began in 1998. In addition, communications technology quickly transitioned from analog to digital. By the turn of the century, business and communications were being conducted around the globe at the speed of light.
These monumental changes brought incredible gains in productivity and have been the driving force behind the world’s recent economic growth. Unfortunately, along with all the incredible benefits came new dangers and a new category of crime: cybercrime.
The cybersecurity industry emerged to combat the rapid rise of cybercrime. Cybersecurity companies exist to protect people and businesses from high-tech criminals. They’re in the business of identifying threats and preventing cyber attacks. When attacks do happen they can minimize damage by detecting intrusions and responding to incidents.
Cybersecurity firms have become a critical part of our digital infrastructure. According to the market intelligence firm Grand View Research, the cybersecurity market will grow at a compounded annual rate of 24.3% through 2030. If those numbers bear out, some publicly traded cybersecurity companies will be excellent investments now and for the foreseeable future.
Here are seven cybersecurity stocks to buy today and hold for the long run.
(PANW)
Santa Clara, California-based Palo Alto Networks is an $87 billion world leader in cybersecurity. Its premiere product, Panorama, is offered as a comprehensive enterprise cybersecurity management solution to businesses and institutions all over the world. Panorama can be implemented on a virtual basis or as an on-site physical appliance system.
Most clients who buy Panorama sign up for the platform’s subscription services to ensure constant threat assessments and virus prevention. This gives PANW significant, ongoing residual revenue. For companies that don’t need or can’t afford the full Panorama platform, PANW offers almost all of its software and applications à la carte.
More than 40 Wall Street equity analysts follow PANW. Collectively, these analysts have arrived at a consensus earnings estimate for 2024 of $7.9 billion and $9.1 billion in 2025 – a 15% year-over-year increase.
A10 Networks is a cybersecurity and networking solutions firm based in San Jose, California. Its clients are located in North America, the Asia-Pacific region, Europe, the Middle East and many parts of Africa.
Among the most popular of the company’s cybersecurity platforms are the Thunder Convergent Firewall, which is billed as an all-in-one critical security gateway, and the A10 Defend Threat Control Platform.
The Thunder Convergent Firewall is an intelligent application delivery system that controls digital traffic and blocks malicious or suspicious data or software such as malware, viruses or hacking programs.
A10 Defender Threat Control is an autonomous software-as-a-service (SaaS) platform that uses advanced data encryption and other measures to ensure that only authorized users get access to sensitive data and financial information.
These are, of course, just two of the many cybersecurity solutions ATEN offers to its clients.
ATEN has a market cap of just over $1 billion and is estimated to generate $236.7 million in revenue this year. ATEN should not be looked at as an income stock, but it does have quarterly dividend of 24 cents and a current yield of 1.8%.
SolarWinds is an information technology software management company with headquarters in Austin, Texas. Cybersecurity is a significant part of the company’s business. SWI’s cybersecurity products are primarily offered through its IT security division, but security elements are integrated into all of its software, especially its network management, systems management and database management offerings.
The firm’s flagship product is called the SolarWinds Orion Platform. This comprehensive network management solution has cybersecurity built right in. While it’s optimizing overall performance, the Orion system continuously monitors all aspects of IT infrastructure – including hardware, software, the cloud and the internet – for unusual activity and suspicious traffic that could indicate a cyber attack.
SWI has a market cap of $1.9 billion. Wall Street is expecting the company to report 98 cents a share in earnings in 2024 on $782 million in revenue.
(CYBR)
CyberArk provides identification security software solutions to customers around the globe. Its products are designed to grant computer and network access to authorized users only, and to block hackers, cybercriminals and other bad actors. They accomplish this by implementing a workforce identity multi-factor authentication system that includes robust password and directory services.
The company’s product line includes the subscription-based software offering it calls Privileged Access Manager. Almost any company that uses high-tech communications and networking equipment is a potential client of CYBR, but most of its customers come from the insurance industry, the health care sector and the government.
Late in March, CFRA equity analyst Janice Quek upgraded her “buy” rating on CYBR to a “strong buy” on what she saw as very impressive subscription momentum and multiple catalysts to long-term revenue and earning growth. Quek is estimating CYBR will generate $946 million in revenue for the current year and deliver $1.87 per share in earnings. The consensus numbers are somewhat below Quek’s, but remain highly impressive. Wall Street is calling for $927 million in revenue and $1.75 per share in earnings.
The $2.9 billion, Boston-based cybersecurity solutions provider Rapid7 offers its cloud security products under the Nexpose and Metasploit brands. Most retail investors will have never heard those names, but they are well known in the cybersecurity sector.
Through applications such as Rapid7 Insight Agent and Rapid7 Insight Network Sensor, RPD gives customers true visibility into their computer and network systems. Users can monitor traffic patterns and data in real time on the premises or from remote locations, 24 hours a day. This allows cybersecurity personnel to identify threats and react quickly to attacks.
With more and more business functions moving from company-owned servers onto the cloud, the company’s Rapid7 Cloud Risk Complete platform is becoming popular as well. In addition to software, RPD offers professional cybersecurity consulting services.
Analysts estimate that the company will generate revenue of over $200 million a quarter in revenue throughout 2024.
(CRWD)
When it comes to cybersecurity stocks, CrowdStrike is a $76 billion juggernaut. Wall Street is looking for just over $3.9 billion in revenue from the company in 2024 and expects that figure to grow by 28% to $5.03 billion in 2025. Those numbers reflect the tremendous growth in the cybersecurity business as well as best-in-class execution by CRWD.
The company’s cloud-delivered security information and event management, or SIEM, system has four key components: information management, event management, incident response and compliance reporting. The entire platform works seamlessly to strengthen the security of any organization that employs it. The idea is to detect threats, respond to events and report them to interested parties in real time.
CrowdStrike sells its premier platform, Falcon, to businesses around the world on a subscription basis. When building a portfolio of cybersecurity stocks, CRWD must be considered.
(AKAM)
Akamai Technologies is a cybersecurity stock that appeared on everybody’s radar screen after it turned in a gain of over 37% in 2023. The stock gave some of those gains back in February of this year, but it’s still well worth owning for the long run.
In addition to comprehensive IT security, this $16 billion company provides cloud computing and content delivery services to customers in the U.S. and internationally. AKAM offers solutions that bolster the security of a company’s entire technology infrastructure, including hardware, software, websites, applications and communication interfaces. It also provides mobile phone and mobile applications security and performance enhancement products.
AKAM sells its products directly and through a large network of distribution partners. The consensus among Wall Street analysts who follow the stock is that AKAM will generate $4 billion in revenue in 2024 and report $6.73 in full-year earnings per share.
