Cybersecurity remains a hot topic around the world, and Wall Street is no exception. As companies up their online protection, related cybersecurity stocks stand to be some of the market’s biggest winners.
I tested a few of these potential investment ideas against my strict NexGen criteria and came up with three cybersecurity names that stand out as future leaders in this key mega-trend.
Of the cybersecurity stocks I examined, Varonis Systems Inc (NASDAQ:VRNS), Proofpoint Inc (NASDAQ:PFPT) and Qualys Inc (NASDAQ:QLYS) are three stocks in the space that are showing significant promise.
Let’s take a closer look at each:
Cybersecurity Stocks to Buy: Varonis Systems (VRNS)
Fundamentals: VRNS is expected to break even in 2017, and the odds are good it could even turn a profit by the end of the year if its growth trend continues. By 2019, earnings are predicted to rise to $0.59 a share. Check.
Technicals: Varonis shares have been consolidating after hitting a multi-year high last month, dipping down to both price support and the 50-day moving average around $37-$38. That provides a nice base to bounce off of and the relative strength index (RSI) recently moved out of oversold territory to generate an RSI crossover buy signal. With volume also suggesting the bulls are in control, this category gets a big check.
Intangibles: The multi-faceted software solutions of VRNS protect data from both insider threats and outside cyberattacks. Check.
Cybersecurity Stocks to Buy: Proofpoint (PFPT)
Fundamentals: PFPT earnings are showing tremendous growth potential from $0.37 a share last year to an estimate of $2.24 a share by 2020. Check.
Technicals: Proofpoint stock started to bounce this week after pulling back to price support at $84, and the chart suggests that an RSI crossover buy signal could be ahead. Volume has been neutral, but that’s just fine when shares are in an uptrend. Check.
Intangibles: PFPT operates as a Security-as-a-Service (SaaS) provider for mid- and large-sized companies, making it a high-demand entity as cyber threats continue. Check.
Cybersecurity Stocks to Buy: Qualys (QLYS)
Fundamentals: QLYS earnings have not been overly impressive this year, although this week’s solid report sent the stock surging. The growth outlook picks up again next year, so the future looks bright here. Check.
Technicals: Qualys volume surged during Thursday’s post-earnings breakout, and the RSI moved higher right along with it. Shares also had a nice level of support at $44. Check.
Intangibles: As a provider of cloud-based security and compliance solutions, QLYS is constantly developing new protection options for both public and private sectors. Check.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.