In the current polarized geopolitical landscape, there is much apprehension between China and US-led factions. This simmering mistrust has triggered a race for technology and military superiority. Consequently, cyber warfare has emerged as a major frontier for this contest. This article highlights the best cybersecurity stocks to buy as this crisis continues.

 Cyber-attacks have intensified in recent years. Rogue actors supported or allowed to operate by nations like China, Russia and North Korea have attacked computer networks and infrastructure.

These attacks are becoming more widespread because of the substantial financial incentives for these nefarious actors. 

For instance, Australia recently experienced widespread cyber-attacks on its financial and medical sector companies. These attempts at sabotage, stealing technology and data have spurred the need for resolute cyber defenses.

 To curb these threats, governments and private companies are prioritizing cyber spending. According to the Boston Consulting Group (BCG) IT spending survey, IT buyers expect to increase spending on cybersecurity in the long term. 

Therefore, expect increased demand for network firewalls, identity management, threat detection and endpoint security solutions. As a result, analysts have highlighted cybersecurity stocks as secular winners. 

Furthermore, the increase in online commerce, cloud workloads and data only require more protections. This bolsters the case for cyber-security stocks.

 Already, cyber stocks have been huge beneficiaries of the online wars. Companies have been spending to protect customer data, intellectual property, and transactions. 

For investors, it’s not too late. Despite the growth over the last five years, we are still in the early innings. These cybersecurity stocks to buy will deliver results over the long term for patient investors.

PANW	Palo Alto Networks	$185.65
CRWD	CrowdStrike’s	$126.92
ZS	Zscaler	$93.60

Palo Alto Networks (PANW)

Palo Alto Networks (NASDAQ:PANW) started as a firewall vendor but has grown to encompass all security areas. It offers integrated security solutions for cloud-native applications. 

Nikesh Arora, the CEO, has orchestrated growth through a series of acquisitions. Although their legacy firewall remains their cash cow, these acquisitions have added next-generation capabilities. 

Its endpoint and security operation solutions include security access service edge, next-generation firewall protection, Cortex and Prisma Cloud. These products provide cloud-native security for cloud workloads, data and applications. 

Due to the breadth of products and the efficacy of its solutions, Palo Alto has become an industry leader. Recently, Frost & Sullivan named Palo Alto the CNAPP company of the year for its comprehensive cloud security solutions.

Growth has been consistent, with revenues rising from $396 million in fiscal year 2013 to $5.5 billion in FY2022. According to the latest quarterly results, revenues grew 26% year-over-year. 

The company is firing on all cylinders and continues to announce more deals, for instance, in November 2022, a nine-figure multi-year deal to provide security solutions to the Department of Defense (DOD). 

Cyber has been a growth industry. Therefore, in the past decade, investors have ignored profits, but with the recent rate increases, profits and valuations matter. 

Luckily, Palo Alto is a growth engine that’s now profitable. In the fourth quarter of FY2022, the company achieved GAAP profitability for the first time in four years. 

As the company comes out of a multi-year investment cycle, it will deliver significant margin expansion. For 2023, the company guided non-GAAP net income per share of $3.97 to $4.03. 

This represents a forward price-to-earnings (P/E) of 47. Thus, it’s one of the top cybersecurity stocks to buy, given the reasonable valuation and management expectations of 25 – 26% revenue growth in FY2023.

CrowdStrike (CRWD)

This cloud-native platform has been rising since its IPO in 2019. Because of its innovative cloud-centric solutions, it has been gaining share from legacy operators like Checkpoint. 

According to Statista, CrowdStrike’s (NASDAQ:CRWD) Falcon platform leads the endpoint security market with a 12.6% market share. Endpoint is crucial security protection as it monitors and secures devices. 

Usually, devices such as laptops are the first entry points for hackers. Thus, endpoint security is the first line of defense organizations must spend on.

Given the strong demand for endpoint solutions, the company is booming. In fact, it is one of the few software-as-a-service companies that reported over 50% YOY revenue growth in Q4 2022. 

Looking ahead, the growth story is intact. In addition to new customers, the company will drive significant revenue growth from existing ones through its land-and-expand model. 

Falcon started with one module and now has 23 focused on endpoint protection. Over the years, the company has added observability, identity protection, security, cloud workload protection and IT Ops. Thus, the company can upsell existing customers.

Revenues have grown by 81%, 66% and 54% over the last three years. Although growth is slowing, it is still in the top quintile among peers. 

The company is set for long-term growth, making it an attractive cybersecurity stock to buy for investors. First, their product innovation and cloud-native approach provide a competitive advantage. 

For instance, since 2011, the company has been leveraging AI for detection and response in its applications. Secondly, they will benefit as existing customers add more security modules. 

Zscaler (ZS)

Zscaler (NASDAQ:ZS) is a security leader, having created a new protection architecture based on zero trust. 

Their Zero Trust Exchange is the largest in-line cloud, processing billions of transactions daily and preventing numerous security violations. Due to its leading-edge innovation, the company has bagged several government contracts. 

The company has the industry’s highest Federal Risk and Authorization Management Program authorization. 12 out of 15 cabinet-level agencies are customers, highlighting Zscaler’s strategic advantage.

 In addition, as companies continue to embrace work-from-home policies, Zscaler will benefit—technologies such as SD-WAN and SASE secure such applications. 

Recent results showed that the company is executing well, despite the challenging macroeconomic headwinds. It reported $387.6 million in revenues last quarter, a 52% YOY growth. 

Also, management is striking a careful balance between growth and profitability. It closed FY 2022 with a non-GAAP free cash flow margin of 21%. Based on management commentary, the growth story is far from over. 

In the recent earnings presentation, the company highlighted its serviceable market opportunity at $72 billion. This signals further growth opportunities over the coming years.

Currently, Zscaler is one of the bargain cybersecurity stocks to buy. Although results have been impressive, the stock has suffered from the tough macro-outlook. 

Over the past year, it has declined by 57%. But, analysts still predict strong growth from robust federal cybersecurity spending in the coming years. Currently, the average TipRanks analyst price target is $156, representing over 50% upside.

On the date of publication, Charles Munyi 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.