You’d think after all of the cyberattacks, we’d be prepared for more. But we’re not. We’re sitting ducks. Even government agencies aren’t fully prepared. That is creating substantial opportunities for some of the best cybersecurity stocks.
“The United States must immediately get ready for domestic, cyber-enabled attacks on critical domestic infrastructure and guard against foreign-initiated information operations targeted at the American people, according to speakers and panelists at an Association of the U.S. Army symposium on Wednesday in Arlington, Virginia, “ reported Chron.
The Hill reported, “Terrifying hacks on critical infrastructure have arrived. America isn’t ready.”
Companies we trust our money with aren’t even ready. In fact, just days ago, loanDepot (NYSE:LDI) fell victim to a ransomware attack. Even Mr. Cooper (NASDAQ:COOP) — no relation — just notified 14.7 million people that personal information was stolen in an attack.
But wait, it gets worse. According to Cybersecurity Ventures, “We expect global cybercrime damage costs to grow by 15 percent per year over the next three years, reaching $10.5 trillion USD annually by 2025, up from $3 trillion USD in 2015.”
To be honest, it’s a bit embarrassing and downright dumb that so many of us, including government agencies, are so ill-equipped to prepare for new attacks. Unfortunately, attacks like this may continue until the issue is taken far more seriously. Until that happens, some of the best cybersecurity stocks should continue to benefit.
Palo Alto Networks (PANW)
The last time I mentioned Palo Alto Networks (NASDAQ:PANW), it traded at around $245 on Nov. 19. Today, PANW is up to $316.09 — and could easily push aggressively higher. All thanks to cyberattacks, which we’re just not prepared for. Helping, Morgan Stanley (NYSE:MS) has PANW as its top cybersecurity pick, with a price target of $375 a share.
Analysts at Susquehanna also have a positive rating on PANW, seeing cyber budgets growing over the year. Wedbush even bumped its PANW price target to $350.
Earnings haven’t been too shabby either. In its most recent quarter, the company revenue of $1.88 billion, up 20% year-over-year. It was also above PANW’S guidance range of $1.82 billion to $1.85 billion. It was also ahead of expectations for $1.84 billion. Adjusted profit was $1.38 a share, which was also above the company’s forecast of $1.15 to $1.17 a share.
Unfortunately, billings in the quarter came in at $2.02 billion, slightly short of estimates for a range of $2.05 billion to $2.08 billion.
While that was concerning for some analysts, Evercore’s (NYSE:EVR) Peter Levine said, “From our fieldwork this quarter…there is no discernible demand issue, no uptick in churn, no change in competitive dynamics or win rates, and management exceeded on all other reported metrics,” as quoted by Barron’s.
Rapid7 (RPD)
Or, if you’re looking for an inexpensive way to trade some of the best cybersecurity stocks, check out oversold shares of Rapid7 (NASDAQ:RPD). Not only is it over-extended on RSI, MACD and Williams’ %R, but it’s just starting to pivot higher from support at its 50-day moving average. From its current price of $54.36, I’d like to see it eventually retest at $70 a share.
Helping, Wolfe Research recently upgraded RPD to an outperform rating with a $56 price target. All after RPD posted strong third-quarter results.
In its most recent quarter, the company posted Q3 EPS of 50 cents, which beat expectations by eight cents. Revenue of $199 million, up 13.1% year-over-year, also beat by $1.91 million. Annualized recurring revenue of $777 million was up 14% year-over-year, as well. Wolfe cited stronger new annual recurring revenue as a reason for the upgrade.
iShares Cybersecurity and Tech ETF (IHAK)
Or, if you want to diversify at a low cost with the best cybersecurity stocks, there’s always an exchange-traded fund like the iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK).
With an expense ratio of 0.47%, the ETF exposes investors to global cybersecurity and tech stocks, such as Juniper Networks (NYSE:JNPR), SentinelOne (NYSE:S), CrowdStrike (NASDAQ:CRWD), Okta (NASDAQ:OKTA), CyberArk Software (NASDAQ:CYBR) and Check Point Software (NASDAQ:CHKP) — to name a few.
It’s also been one of the most explosive ETFs on the market, too. In fact, since bottoming out around $35 at the end of October, it’s now up to $45.58.
Over-extended at heavy resistance, I’d wait to buy IHAK on the next pullback. With all of the cyber issues out there, I’d eventually like to see the ETF initially re-challenge its 2021 high of $48.48. Longer-term, I’d like to see the IHAK ETF closer to $60 a share.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
