As the digital world races forward, the need to shield its expanses becomes increasingly important. Enter cybersecurity, standing tall as one of the most compelling investment themes for the upcoming decade. This sector reverberates with potential, especially as cyber threats cast long shadows over the digital landscape, making cybersecurity stocks to buy a no-brainer for astute investors.
Given its pivotal role, cybersecurity is poised to outpace growth in other software niches. While the sizzle might be with the faster-growing cybersecurity stocks, the lower-growth counterparts shine with robust cash flows and impressive margins while boasting attractive valuations. Hence, for those searching for the most promising cybersecurity stocks to buy, a deeper dive might reveal glittering opportunities.
Cybersecurity Stocks to Buy: IBM (IBM)
In the ever-evolving digital landscape, IBM (NYSE:IBM) has astutely positioned itself at the forefront of multiple technological revolutions. As it embraces the burgeoning demand for cloud computing, blockchain, and, notably, cybersecurity, IBM’s multifaceted security framework is tailored to meet the varied needs of enterprise-grade clientele.
Moreover, as the shift towards cloud data storage gains momentum, IBM’s cloud security solutions emerge as a beacon of assurance, particularly as the specter of ransomware haunts the digital realm. However, it’s IBM’s relentless spirit of innovation that truly sets it apart. Spearheading advancements in artificial intelligence () and machine learning ( ) tailored towards cybersecurity, the tech giant is also casting its gaze forward, plunging into the promising waters of quantum computing. Hence, the future seems bright for those under IBM’s tech umbrella.
Cisco Systems (CSCO)
Few businesses shine as luminously as Cisco Systems (NASDAQ:CSCO) in the burgeoning digital communications space. The emphasis on robust network security intensifies as the corporate world increasingly leans on cloud infrastructures. With its powerful brand equity and unparalleled market reach, Cisco seamlessly steps in, offering fortified, scalable solutions that overshadow its peers.
What might astonish investors is Cisco’s innovative embrace of AI, interweaving it expertly with its cybersecurity suite. Recent times have seen the firm unveil a series of groundbreaking AI technologies aimed at streamlining operations and bolstering productivity. A stellar testament to its foray is the launch of an AI-driven infrastructure solution, raking in a sizeable $500 million in orders in just the second quarter this year. Further enriching its security portfolio, Cisco harnesses generative AI, refining threat responses and policy management. Hence, Cisco’s AI-enhanced security cloud platform is poised to deliver the goods for its investors, bolstering its already impressive shareholder rewards program.
Check Point Software (CHKP)
Navigating the world of cybersecurity stocks to buy, Check Point Software (NASDAQ:CHKP) emerges as a compelling choice for those eyeing this growing domain. Given companies’ current cybersecurity challenges, enterprises invariably lean towards holistic cybersecurity solutions, and Check Point rises to the occasion in this regard. It continues to enhance its offerings with robust cloud, network, and remote user security. Its recent $490 million acquisition of Perimeter 81 in August is a case in point. Its acquisition, renowned for its stellar cloud and on-device defenses for remote users, aligns with Check Point’s mission to amplify its unified security in line with the rise of remote data access.
Furthermore, the second quarter of 2023 showed a commendable 14% year-over-year (YOY) surge in security subscription revenues, with the management radiating optimism for the latter half. But it’s not just about revenues. A solid non-GAAP net income of $238 million and a 14% YOY surge speaks volumes about its robust positioning. Additionally, with Check Point repurchasing 2.6 million shares for a whopping $325 million, the firm is committed to boosting shareholder rewards.
Despite a tumultuous ride this month for Fortinet (NASDAQ:FTNT), savvy investors might recognize a golden window of opportunity following a surprising guidance trim. With a towering presence in cybersecurity, Fortinet stands as a true juggernaut, particularly in the enterprise arena, underpinned by its all-encompassing security toolbox. From impenetrable firewalls and state-of-the-art SD-WANs to trailblazing secure access service edge (SASE) offerings, Fortinet covers all bases. Layer that up with its zero-trust access solutions and cloud security, and you have a cybersecurity package that is second to none.
Fortinet’s fiscal mastery is exemplified by its sterling net income and free cash flow margins, north of 17.3% and 27.5%, respectively, over the past five years. While its most recent quarter might’ve ruffled some feathers, 2023 paints a promising picture for Fortinet. With revenue growth projections teetering at a robust 20% and margins set to grow further, the future for Fortinet gleams brilliantly.
Palo Alto Networks (PANW)
Palo Alto Networks (NASDAQ:PANW), headquartered in Santa Clara, is the market leader in the cybersecurity landscape. Central to its offerings is an innovative platform encompassing advanced firewalls and cloud-based extensions, ensuring comprehensive digital security. Palo Alto’s global footprint is indisputable, serving a massive clientele spanning 70,000 organizations across 150 different countries.
With industry-leading metrics, there’s little to take away from its brilliance. Revenue growth is at a staggering 25.3% YOY, trumping the sector median by 163%. Additionally, Its profitability profile is incredible, marked by gross and net margin growth of 72.3% and 6.4%, respectively, ahead of its historical averages. Moreover, its free cash flow margin is a whopping 32%, blowing past the sector median by 365%. Analysts at TipRanks rate it as a “strong buy,” forecasting an 18% upside from current price levels.
Akamai (NASDAQ:AKAM) has positioned itself as a trailblazer in Content Delivery Network (CDN) services while simultaneously bolstering its security business. While its robust CDN legacy remains intact, the burgeoning security business is turning heads, contributing a whopping 42% to its sales last year.
Moreover, in its second quarter, it generated impressive revenue of $936 million, a 4% surge YOY, with security and compute avenues representing 59% of this total. Despite the cybersecurity realm brimming with competitors, Akamai’s growth trajectory remains unscathed, with the segment expected to be its cash cow for the foreseeable future.
Venturing into the cloud computing arena, Akamai is now clashing with dominant tech titans. Nevertheless, the company’s cloud computing arm displayed a stellar growth of 60% from 2021 to 2022, surpassing even its dominant security segment.
California’s SentinelOne (NYSE:S) continues to make waves in the cybersecurity landscape, wielding machine learning to oversee cloud operations, PCs, and myriad devices vigilantly. It’s operated a consistent business over the years, fortifying its presence in both endpoint and cloud security realms.
However, its recent performances have investors skeptical over its near-term performance. Its stock is down over 40% in the past year. It reduced its full-year forecast during the first quarter, with sales falling short of projections by $3.2 million. Additionally, its sales witnessed an exhilarating 70% YOY growth, reaching $133.4 million. Furthermore, the firm’s annual recurring revenue leaped by 75% YOY to an impressive $563.6 million. However, it’s imperative to acknowledge that the broader macroeconomic winds are shaping deal dimensions, elongating sales cycles, and influencing pipeline conversion velocities. Nonetheless, over the long term, S stock represents an exciting bet at current levels.
On the date of publication, Muslim Farooque 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.