New regulations and threats fuel growth for these cybersecurity stocks
In the cybersecurity industry, $2 trillion market opportunity. As last year’s record number of ransomware attacks demonstrated, the threat is growing and businesses need to strengthen their defenses. This makes cybersecurity stocks a top industry to invest in.
Several tailwinds support cyber defense spending. First, rising threat levels have made cybersecurity a priority for organizations. Otherwise, neglecting this area can lead to financial loss and brand damage in the event of a breach.
Second, artificial intelligence (A.I.) is primarily a positive force, but it has some flaws. One of the big problems is Hackers are using AI Create advanced malware. Therefore, organizations should be equally vigilant and invest in the best threat detection tools provided by top cybersecurity companies.
Finally, the latest disclosure rules from the Securities and Exchange Commission require companies to disclose attacks. According to the rules, companies must notify investors within four days of a security breach. Disclosures that create a negative impression on a company can lead to a loss of trust from customers and investors.
Given these factors, organizations recognize that their cyber defense needs are urgent. These three cybersecurity stocks are at the forefront of this effort with cutting-edge solutions.
Fortinet (FTNT)
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After a poor performance in 2023; fortinet (NASDAQ:FTNT) has a chance of recovery in 2024. palo alto networks (NASDAQ:Panwoo) could result in significant upside. As of this writing, the price-to-sales multiple is 9x compared to Palo Alto’s 16x.
Fortunately, the underlying factors that led to the poor performance are improving. The firewall market experienced a slowdown in 2023 after several years of declining demand. As a result, product sales decreased by 0.6% compared to the previous year. Third quarter of 2023 Revenue rose to $465.9 million from $468.7 million the previous year.
according to american bank (New York Stock Exchange:BAC), the firewall headwind is temporary. With new product momentum gaining momentum, we expect the firewall segment to resume growth in the second half of 2024. Fortinet Firewall sales are driving broader platform sales. Therefore, re-acceleration will boost the overall business. Given its potential for a return to growth, it’s one of Bank of America’s top cybersecurity stocks for 2024.
On the profitability front, management remains focused on maintaining industry-leading profit margins. CEO Ken Xie reiterated this profit target: Announcement of financial results for the third quarter of 2023. “We will continue to [a] We will be able to achieve healthy operating margins of over 25% in 2024 and 2025,” he said.
Fortinet recognized as a leader Gartner Magic Quadrant for security markets including SD-WAN, network firewalls, and SASE. As growth accelerates in the second half of 2024, the stock price will soar.
Palo Alto Networks (PANW)
![Palo Alto Networks (PANW) logo on the company building](https://investorplace.com/wp-content/uploads/2019/08/panw-stock-1-300x169.jpg)
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Palo Alto Networks is one of the best cybersecurity stocks to buy due to its growth and profitability profile. Last year, the company S&P500. Rising interest from institutional investors is likely to support the rise in stock prices.
The cybersecurity giant participates in four out of the five largest cybersecurity sectors. A leading provider of firewalls, security operations center management, endpoint protection, and cloud security. Now, the company is seeing a surge in demand for its next-generation security portfolio, which includes Cortex XDR and XSIAM.
According to MITER, Cortex XDR, Palo Alto’s security operations (SecOps) product, is the only solution that achieves 100% protection and detection. With this advantage, Cortex’s customers have grown by 25% year over year to over 5,300 companies. First quarter of fiscal year 2024.
XSIAM is another key product redefining security operations for customers in the AI era. Since launch in Q1 2023, we have over $200 million in bookings and average annual commitments of over $1 million. Notably, as of the end of the first quarter of 2024, more than $1 billion worth of transactions were in progress.
Next-generation security portfolios are in high demand. The division’s annual recurring revenue has increased more than 50% year-over-year over the past five quarters. In the most recent quarter, ARR reached $3.2 billion, an increase of 53% year-over-year.
Finally, non-GAAP operating margin increased from 21% in the first quarter of 2023 to 28% in the first quarter of 2024, with margin expansion. As a result, operating income increased from $322 million to $529 million. With a best-in-class next generation portfolio and skyrocketing profitability, PANW stock is the perfect protection for your portfolio.
Zscaler (ZS)
![Zscaler (ZS) logo in the company building](https://investorplace.com/wp-content/uploads/2020/05/zs-stock-300x169.jpg)
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One of my favorite cybersecurity stocks for 2024 is: Z scaler (NASDAQ:ZS). Notably, there are several catalysts for further upside in 2024.
First, because the company is a major provider to federal agencies, you can enjoy the following benefits: Federal Zero Trust Strategy. The Biden administration has issued an order requiring federal agencies to meet certain Zero Trust goals by 2024. As these government agencies adopt zero trust architectures, Zscaler’s revenue will increase.
Second, the company has a strong product pipeline that will drive future revenue growth. Innovations like Branch Connector and Risk360 provide more revenue opportunities. These new products are already gaining momentum. For example, Branch Connector, a plug-and-play software that eliminates the need for a firewall, is in high demand.
Third, there is growth opportunity for our existing products, Zscaler Private Access (ZPA) and Zscaler Digital Experience (ZDX). Most large customers have adopted his Zscaler Internet access, but less than 60% and 10% use ZPA and ZDX, respectively. According to management, approximately 50% of the new logo growth in the first quarter of 2024 was from a combination of three logos. Increase adoption of ZPA and ZDX through the “Zscaler for Users” bundle.
Finally, management sees significant opportunity in applications of artificial intelligence and machine learning. In June 2022, Start AI/ML capabilities And we recently announced AI-powered analytics for our customers. The AI-driven features included in the ZS Advanced Plus bundle are more expensive than regular bundles.
All of the above opportunities make Zscaler one of the top cybersecurity stocks to buy today. After his 48% increase in FY2023 revenue, FY2024 is off to a great start, with Q1 FY2024 revenue increasing 40% year-over-year. Considering the growth in revenue, Wall Street analysts are bullish ZS stock has a “Strong Buy” rating of 25.
On the date of publication, Charles Munyi did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.