These Cybersecurity Stocks Will Keep Your Business Safe and Help Your Portfolio Too
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Cyber attacks continue to increase every year. It’s a lucrative industry for hackers, but businesses can protect themselves with cybersecurity software and services. Protecting online data helps businesses maintain a good reputation and avoid serious financial damage.
Investors can get more out of their money by looking for industries with steady capital flows and demand. Cybersecurity is a core service that many businesses rely on. As a result, businesses can’t escape from it because it costs much more than a monthly subscription.
This dynamic gives cybersecurity companies significant advantages, but some are better than others. These three cybersecurity stocks look promising for investors looking for exposure to a fast-growing industry.
Fortinet (FTNT)
fortinet (NASDAQ:FTNT) faces headwinds due to lower gross billings growth leading to lower revenue growth.Company is still listed 16% year-over-year (YoY) revenue growth; However, this is far from 30%+ year-over-year revenue growth.
Although profits were sluggish, Service revenue still growing fast. The division grew 27.6% year over year and accounts for more than half of Fortinet’s business. Only product revenue slowed, but should recover once short-term headwinds pass.
This pullback presents an attractive long-term buying opportunity for investors who can wait a few years. The company is highly profitable, consistently posting net profit margins above 20%.
Stock prices rose 22% year-to-date (year-to-date) in the year-end bull market. The stock price has increased 322% over the past five years. Fortinet stock currently trades at a forward price-to-earnings multiple of 35. The company delivers growth and profitability to investors.
Palo Alto Networks (PANW)
palo alto networks (NASDAQ:Panwoo) appears to be very highly valued on the surface, but rapid growth in net income makes the valuation look more reasonable. Cybersecurity leaders offer a variety of software and services. Businesses can use Zero Trust platforms to protect their online information.
The stock trades at a forward P/E of 57x, which seems more reasonable than the company’s P/E of 168x. PANW has a similar story. Nvidia (NASDAQ:NVDA) when it comes to net income growth and valuation. The company posted $194.2 million in GAAP net income. First quarter of 2024. This is an 871% increase over the previous year.
Palo Alto Networks’ net income won’t be able to keep up that pace. However, the company only needs a few more quarters of strong net income growth to justify this valuation. Sales increased 20% year over year, and first quarter profit margin was 10%.
Palo Alto Networks has room to expand its margins and become a reasonably valued stock. Investors are reaping the benefits so far. The stock has more than doubled since the beginning of the year and is up almost 400% over the past five years.
Zscaler (ZS)
A common theme among many cybersecurity stocks is market outperformance. Z scaler (NASDAQ:ZS) is no exception. Over the past five years, the stock price has doubled year over year, increasing by 457%. Despite the big rally, the stock is still about 40% below its all-time high.
Zscaler isn’t as profitable as the other two companies. However, revenue growth was even higher, at 40% year-on-year in 2018. First quarter of 2024. Billings grew 34%. This suggests there is more to the growth story than that.
GAAP net loss was $33.5 million, a marked improvement from GAAP net loss of $68.2 million for the same period last year. The company is targeting annual recurring revenue of over $5 billion from its cloud security business. ZS recently appointed two industry leaders to support this effort.
The company aims to generate revenue of $505 million to $507 million in the second quarter of fiscal 2024. His $506 million at the midpoint represents a 30.5% year-over-year revenue increase.
On the date of publication, Mark Guberti held a long position in FTNT. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publication guidelines.