Fifth-generation mobile networks are here and the market is huge. According to Allied Market Research, the global 5G technology market will grow from $5.5 billion this year and reach $667.9 billion by 2026. That represents a compound annual growth rate of 122.3%.
The massive growth forecast is due to the fact that 5G will radically change global communications. It will advance everything from the internet of things (IOT) to self-driving cars. Cloud computing, big data, artificial intelligence, virtual reality and IOT will all take major leaps forward in the coming years with 5G networks.
Cybersecurity is a big part of 5G mobile networks. It is important to keep the enormous volume of data and information safe and secure. All 5G networks will require built-in, end-to-end security. The 5G security market will be worth $4 billion in 2023 — and keep growing exponentially from there.
Here we look at seven cybersecurity stocks to buy that are ready for the 5G surge.
- CrowdStrike (NASDAQ:CRWD)
- NortonLifeLock (NASDAQ:NLOK)
- Fortinet (NASDAQ:FTNT)
- Palo Alto Networks (NYSE:PANW)
- Cloudflare (NYSE:NET)
- FireEye (NASDAQ:FEYE)
- Marvell Technology (NASDAQ:MRVL)
Cybersecurity Stocks to Buy: Crowdstrike (CRWD)
California-based CrowdStrike is aggressively growing and taking market share in the competitive 5G space. The company has grown its revenues from $52.7 million in 2017 to $654.3 million this year. Part of that growth has come from sales of its cloud-based, easy-to-use endpoint protection solution. This solution requires users to install a light piece of software in order to receive cybersecurity protection.
Growth has also come from acquisitions. CrowdStrike most recently acquired Preempt Security for $96 million in cash and stock, which will further enhance its platform with identity security capabilities. The strong revenue growth and acquisitions have helped to propel CRWD stock higher.
CRWD stock has more than tripled (up 316%) since its March low and now trades at $140 a share. Analysts see further growth ahead with a median price target on the stock of $150.
Protecting consumers against cyber criminals is NortonLifeLock’s bread and butter. The company is an industry leader in providing people with device security, protection against identity theft and privacy software. And NortonLifeLock has been taking advantage of the Covid-19 pandemic and the accelerated move of people online.
In its most recent quarter, the company reported a profit of $528 million, and saw revenues increase to $614 million. NortonLifeLock also has free cash flow of $169 million at the end of June.
Moving forward, NortonLifeLock is in a position to continue capitalizing on growing consumer need for cybersecurity — a need that will increase with the continued rollout of 5G networks. The company has stepped up its marketing efforts in an effort to familiarize itself with consumers and raise its brand profile.
NLOK stock is up 27% from its March bottom at $21, but is still below its 52-week high of $28.70.
Cybersecurity Stocks to Buy: Fortinet (FTNT)
Founded in 2000, Fortinet is one of the oldest and most established cybersecurity companies on the market today. The “FortiGate” firewall is a tried and tested mobile cybersecurity platform that companies have come to trust.
Fortinet continues to help its corporate clients put firewalls in place, managing virtual private networks that encrypt communications coming from servers and implementing intrusion prevention systems.
The company’s “SD-WAN” solution is especially helpful for remote workers and home offices. At the start of the global pandemic, many companies rushed to adopt and expand Fortinet’s firewalls to protect their employees and cyber networks as they transitioned to virtual office spaces. The moves have helped FTNT stock climb 55% since March to $117 per share.
While the stock price has pulled back in recent weeks, Fortinet remains a safe bet when it comes to cybersecurity and 5G networks.
Palo Alto Networks (PANW)
Like Fortinet, Palo Alto Networks is an older cybersecurity that has been enjoying a resurgence lately. The company’s final quarter of fiscal 2020 was one of its strongest ever. Stating that Covid-19 has accelerated its business, it saw revenue grow 32% year-over-year.
The company, which was founded in 2005, has an outlook for 2021 that calls for 17% annual growth.
While it has been a number of years since Palo Alto Networks had the hottest next-generation firewall, the company has nevertheless driven very consistent execution throughout the pandemic. And Palo Alto Networks has been on a buying spree lately, recently announcing that it is spending $265 million to acquire The Crypsis Group, which provides digital forensics consulting, risk management and incident response services. Those are all new offerings that Palo Alto can use to grow its customer base.
Yet despite strong growth and financial results, investors have been ignoring PANW stock. The share price is up 85% from its March doldrums, but remains below its 52-week high of $275.03. Many analysts and news sites have identified Palo Alto Networks as a buying opportunity at current levels.
Cybersecurity Stocks to Buy: Cloudflare (NET)
For a newer and hotter cybersecurity stock, look to Cloudflare. NET stock has been on a roll lately, more than doubling year to date (up 140%) at just over $40 per share. The median estimate of analysts is for the stock to run as high as $48 a share, suggesting further appreciation in the share price.
Driving Cloudflare to new heights has been its niche position in its corner of the cybersecurity sector. Specifically, Cloudflare provides protections for websites that stop bad actors from rendering pages inaccessible. It also provides services for speeding up content delivery, ensuring that web pages function quickly and are responsive to users. Today, the company helps support over 25 million different web properties and has a market capitalization of roughly $13 billion.
Sales climbed 48% year-over-year in the last quarter, and the company is on track for big growth with 5G and as the need to protect against web-based cyber attacks rises.
For more patient investors with a long time horizon, there is FireEye. The stock has been beaten down lately due to largely flat growth. However, the disappointing results can be attributed to the fact that FireEye has been shifting its business from a product-driven model to a subscription-based one that focuses exclusively on cloud security.
Once the change in direction is complete, analysts expect FEYE stock to trend higher.
Indeed, there is reason for optimism. During the second quarter, revenue from FireEye’s cloud subscription security service rose nearly 30% year-over-year to $73.5 million. Professional services revenue also increased by an annualized 21% to $52.6 million. This indicates that FireEye is successfully transitioning its business.
FEYE stock is up 58% since March at $12.50 a share, but remains down from its 52-week high of $18.34.
Cybersecurity Stocks to Buy: Marvell Technology (MRVL)
Last but certainly not least is Marvell Technology, a company that many experts claim is the No. 1 cybersecurity stock and 5G play. In fact, CNBC host Jim Cramer has gone so far as to call Marvell Technology “Mr. 5G.” And to be sure, the company has been doing a lot of impressive things lately. In fact, on Sept. 25, the company rewarded shareholders by announcing a quarterly dividend of 6 cents per share.
The company can afford to be generous after reporting second-quarter fiscal 2021 non-GAAP earnings of 21 cents, which surpassed the consensus estimate of 10 cents. Moreover, the reported figure increased three-fold from the year prior. Marvell’s second-quarter revenues of $727 million also outpaced the consensus mark of $720.5 million. Almost all of the growth has come from the company’s involvement in securing 5G networks.
Year to date, MRVL stock has more than doubled (up 131%). Investors should see the current market correction as a buying opportunity with this emerging 5G cybersecurity company.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.