- Increased digitalization as well as the current war in Ukraine have put cybersecurity stocks in the limelight.
- A10 Networks (NYSE:ATEN) — The software services specialist released strong Q1 metrics.
- Check Point Software Technologies (NASDAQ:CHKP) — The cybersecurity pioneer has been defying the market meltdown.
- CrowdStrike (NASDAQ:CRWD) — Record revenue means Crowdstrike is able to cater to evolving customer needs.
- Fortinet (NASDAQ:FTNT) — It’s a profitable heavyweight, especially in next-gen firewalls.
- Palo Alto Networks (NASDAQ:PANW) — The company has a solid base of large customers and investors are expecting robust results on May 19.
Our topic for today is cybersecurity stocks to buy in May. According to the Cybersecurity & Infrastructure Security Agency (CISA), cybersecurity helps protect “networks, devices, and data from unauthorized access or criminal use…”
Businesses and individuals have grown more dependent on computers, smartphones and other intelligent devices. Yet, the connectivity infrastructure can also be an invitation for hackers. Cyber attacks can steal both money and information. They also disrupt businesses operations leading to financial damages as well as loss of customer trust.
In its 2021 Cost of Data Breach Report, International Business Machines (NYSE:IBM) suggests “Data brsteach costs rose from $3.86 million to USD 4.24 million, the highest average total cost in the 17-year history of this report.” Meanwhile, other recent research highlights that between 2022 and 2029, the cyber security market worldwide could grow at a compound annual growth rate (CAGR) of close to 13.5%.
Most of this data helps us form the big picture just before the invasion of Ukraine in the first quarter. Now, CISA declares a “Shields Up” for possible cyber attacks from Russia as retaliation against the U.S and its allies. Put another way, the future for robust cybersecurity shares looks bright.
With that information here are five tempting cybersecurity stocks to buy in May:
|ATEN||A10 Networks, Inc.||$14.54|
|CHKP||Check Point Software Technologies Ltd.||$120.61|
|CRWD||CrowdStrike Holdings, Inc.||$139.81|
|PANW||Palo Alto Networks, Inc.||$478.51|
A10 Networks (ATEN)
Our first cybersecurity stock is A10 Networks (NYSE:ATEN), a key player in providing cybersecurity and infrastructure solutions. Customers include cloud providers and internet service providers as well as governmental agencies.
A10 Networks reported first-quarter results on May 3. Revenue came in at $62.7 million, an increase of 14.3% year-over-year (YOY). Wall Street was pleased to see that security product revenue grew by 20.1%. Diluted earnings per share (EPS) was 13 cents compared to 12 cents for Q1 2021. The company also spent $28.3 million on share repurchases.
The board of directors declared a dividend payout of 5 cents per share, payable on June 1. Management is expecting to achieve a top line growth target of 10%-12%.
ATEN stock is down by 14.9% YTD, but still up 58.8% over the last 12 months. Dividend yield is 1.42%. Shares are changing hands at 21.41 times forward earnings and 4.63 times sales. Meanwhile, the 12-month median price forecast for A10 Networks stands at $20.
Check Point Software Technologies (CHKP)
Our next cybersecurity stock to consider in May is the Israel-based Check Point Software Technologies (NASDAQ:CHKP), one of the pioneers of cybersecurity. It provides solutions to governments and corporate enterprises worldwide.
Readers may be interested to know that it is the third-largest Israeli company by market capitalization (cap). More than 100,000 organizations rely on Check Point products and services.
Check Point announced Q1 results at the end of April. Revenue came in at $543 million, achieving 7% growth YOY. Security subscriptions grew at an even-better rate of 14% resulting in $202 million.
Diluted EPS increased by 2% YOY to $1.57. Cash flow from operations stood at $398 million, while the company repurchased 2.5 million shares at a cost of $325 million.
CHKP stock is up by 2.5% YTD, but down 0.3% over a 12 month period. Shares are trading at 16.6x forward earnings and 7.2x trailing sales. Meanwhile, the 12-month median price forecast for Check Point Software is $145.
We continue the list of cybersecurity stocks with Crowdstrike (NASDAQ:CRWD), which focuses on cloud-delivered protection of endpoints, cloud workloads, identity and data.
Crowdstrike reported Q4 FY22 results on March 9. Total revenue was $431.0 million, an increase of 63% YOY, compared to $264.9 million in Q4 FY21.
Wall Street was also pleased with the FY22 annual recurring revenue (ARR). Through new subscriptions, ARR grew 65% to reach $1.73 billion.
Net income per diluted share was 30 cents, compared to 13 cents in Q4 FY21. Cash and equivalents stood at $2 billion as of Jan. 31.
So far in the year, CRWD stock is down by 27.1%, and also 20.4% over the past 12 months. Despite the decline, shares are still frothy. They are trading at 149.3x forward earnings and 25.8x sales. At present, the 12-month median price forecast for Crowdstrike stands at $275.
Next up is Fortinet (NASDAQ:FTNT), one of the global leaders of cybersecurity. It provides a broad array of next-generation security and networking functions. Around 500,000 customers rely on its market leader firewall platform Fortigate.
FTNT reported Q1 results on May 4. Revenue came in at $954.8 million, up 34% YOY. Diluted earnings per share was 94 cents compared to 81 cents for the same period the previous year. Free cash flow (FCF) was $273.5 million.
Recent research by Fortinet highlights: “Cybersecurity skills gap contributed to 80% of breaches.” In other words, there should be room for growth for cybersecurity companies that can fill that gap.
Despite the impressive growth in revenue, FTNT stock has lost around 27% since January but returned 26.7% over the last 12 months. Shares are trading at 53.7 times forward earnings and 12.4 times sales. Meanwhile, the 12-month median price forecast for Fortinet is $360.
Palo Alto Networks (PANW)
The security giant offers appliances and software, and recently announced the latest upgrade to its PAN-OS software, Nebula. Among the customers of Palo Alto Networks are the giants of financial and healthcare industries. In fact, its products are used by more than 85 of the Fortune 100 firms.
PANW reported Q2 FY22 results on Feb. 22. Total revenue was $1.3 billion, up 30% YOY. Diluted EPS was $1.74 compared with $1.55 for Q2 FY21.
Meanwhile, management also raised guidance for the fiscal year. It now expects revenue to come between $5.425 and $5.475 billion.
Like most of its peers, Palo Alto stock is down YTD, in this case 17.5%, but up 34.6% over a 12-month period. Shares are changing hands at 59.17 times forwards earnings and 10.63 times sales. Finally, the 12-month median price forecast for PANW is $635.10.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.