In an era where digital connectivity is both a boon and a bane, the rising cyber threats have effectively turned the spotlight on cybersecurity stock picks 2024. While opening doors to new sectors, the digital revolution has escalated the frequency and severity of cybercrimes. A telling statistic reveals that ransomware attacks in the first nine months of 2023 surpassed the total count of 2022. One in every four individuals has their health records compromised within the same period, underscoring the growing menace.

Consequently, investing in cybersecurity stocks is imperative, offering robust long-term upside ahead. These firms not only offer crucial security solutions but also boast a model of annual recurring sales, promising powerful long-term growth prospects.

Cybersecurity Stock Picks 2024: Fortinet (FTNT)

Fortinet (NASDAQ:FTNT) stands out in cybersecurity for its top-tier security solutions and innovative approach to secure networking, security operations, and SASE (universal secure access service edge). This dynamism has effectively attracted a colossal customer base of over 705,000 across many sectors. Recently, Fortinet has taken a major leap forward by integrating generative AI into its security assistant, a move set to transform productivity among security teams. The company’s prowess is prominent in fabric and network cloud security platforms, effectively catering to the evolving needs of small and medium enterprise businesses.

Fortinet’s financial trajectory speaks volumes about its market dominance and strategic agility. Since 2016, the company has witnessed a whopping 305.6% jump in sales, trailing twelve-month revenue of $5.17 billion. Even more impressive is its net income surge by approximately 3474% during the same period, with a TTM of $1.15 billion. Moreover, despite challenges in secure networking, Fortinet’s strategic consolidation of product endpoints is paying off, cementing its position as a long-term player in its niche.

Tenable (TENB)

Tenable (NASDAQ:TENB) emerges as a beacon of innovation, offering context-driven analytics with its human-centric approach, which resonates deeply with its clientele. This strategic posture has propelled Tenable into the cybersecurity elite, serving over 40,000 customers globally, including an eye-catching 60% of Fortune 500 and 40% of Global 2000 companies. As enterprises increasingly prioritize cybersecurity, funneling investments into this sector, Tenable stands tall, wielding significant pricing power in the cloud security market while maintaining its hold as a leader in vulnerability management.

Tenable’s prowess isn’t just in its offerings but its powerful financials, renowned for consistently outperforming revenue and margin expectations. This exemplary track record, stretching from the fourth quarter of 2018 to the third quarter of 2023, has significantly fueled investor confidence. Moreover, Tenable made Morgan Stanley’s illustrious U.S. Equity Strategy Weekly Warm-Up report, highlighting 57 overweight stocks primed for standout growth. Further bolstering its position, Tenable commands a ‘strong buy’ rating from Tiprank’s, with an enticing 14% upside potential.

SentinelOne (S)

SentinelOne (NYSE:S) is another top player in the cybersecurity space with its innovative Singularity platform. This AI-powered platform promises comprehensive protection across cloud-based software, mobile devices, and other digital realms. This drive towards advanced AI-related threat protection is further strengthened by the company’s strategic move to acquire PingSafe, aiming to revolutionize cloud security by seamlessly integrating AI, analytics, and cloud workload protection.

Financially, SentinelOne is showcasing its market prowess. The firm reported third quarter loss per share of just three cents, significantly outperforming the anticipated eight cents, alongside a revenue surge of over 42% year-over-year to $164.17 million, surpassing consensus by $7.85 million. This upward trajectory is mirrored in their upwardly revised full fiscal year 2024 revenue forecast of $616 million, well above the consensus estimate. Additionally, the stock’s impressive doubling over the past year, spurred by positive investor sentiment and encouraging earnings, underscores the company’s strong market position. Adding to this momentum is the buzz around its new Purple AI platform, currently in beta, poised to augment SentinelOne’s AI-enabled cybersecurity offerings significantly.

CyberArk Software (CYBR)

CyberArk Software (NASDAQ:CYBR) is an Israel-based cybersecurity leader, effectively carving a niche in the sector by effectively defending against the growing threat of weaponized AI while harnessing the same technology to fortify its cybersecurity solutions. This innovative approach has resulted in solid growth for the business, evident from the company’s top-line surge of 25% to a record $191 million last quarter, compared to the same period a year earlier. The company’s financial outlook is equally promising, with the forecasted operating income for 2023, projected to be a substantial $17.7 million to $21.7 million.

Moreover, the company’s total annual recurring revenue reached $705 million, marking a 38% year-over-year increase, a testament to its consistent growth and innovative edge in the cybersecurity sphere. This stellar performance is likely why CyberArk is currently enjoying the limelight among analysts, securing a ‘strong buy’ rating from Tiprank’s among 25 analysts, with a price target suggesting a 4% upside.

Rapid 7 (RPD)

Rapid 7 (NASDAQ:RPD) has made significant strides in the realm of cybersecurity by empowering technical teams with power tools to detect and counter cyber threats effectively. The company’s offerings enable firms to gauge and mitigate their vulnerability to cyberattacks and provide the invaluable support of expert teams in preempting and managing hacks, ensuring an all-encompassing security solution.

Reflecting its strong foothold in the market, Rapid 7’s recent financial performance underscores its growth trajectory. The company reported a third quarter EPS of 50 cents, surpassing expectations by eight cents, alongside a 13.1% year-over-year revenue increase to $199 million, exceeding forecasts by $1.91 million. Furthermore, the annualized recurring revenue standing at $777 million, marking a 14% increase from the previous year, coupled with the reaffirmation of the 2023 free cash flow target of $80 million, paints a picture of robust financial health. Moreover, with an expectation to double free cash flow in 2024 and a valuation at just 4.3 times forward sales estimates, substantially below the sector median, the stock is positioned as an incredibly attractive investment proposition.

Zscaler (ZS)

Zscaler (NASDAQ:ZS) has effectively carved out a name for itself as a formidable force in cloud security, boasting impressive top-line growth exceeding the 50% mark over five years. As 2024 unfolds, the company is positioned impressively to harness the momentum from Biden’s federal zero-trust security mandate, fitting in perfectly with its services for government agencies. The innovative thrust of products, including the Branch Connector and Risk360, is set to propel Zscaler’s revenue growth, with the market’s warm reception of the Branch Connector boding well for the company’s trajectory.

Financially, Zscaler’s prowess is undeniable, as illustrated by its first-quarter Non-GAAP earnings per share of 67 cents, outpacing expectations by a notable 18 cents. The company’s revenues soared to $496.7 million, marking a 39.7% year-over-year surge while beating forecasts by $23.27 million. This stellar performance cements Zscaler’s position as a consistent growth entity by maintaining its Rule of 60 for 13 consecutive quarters. Furthermore, the buzz around its potential acquisition of Avalor for $250 to $350 million, following the strategic acquisitions of Canonic Security and Trustdome, underscores the company’s commitment to expanding its footprint and pioneering cybersecurity innovation.

IBM (IBM)

IBM (NYSE:IBM), a legacy behemoth in the tech sector, boasts a robust enterprise-level cybersecurity business with a suite of advanced solutions powered by artificial intelligence (AI), including threat intelligence and cloud security. Moreover, IBM’s diverse portfolio provides a safety net of alternative success avenues. The firm’s comprehensive approach to cybersecurity is particularly noteworthy, encompassing prevention and efficient post-breach recovery protocols and ensuring end-to-end coverage.

Recently, IBM’s shares experienced a significant surge, outperforming Wall Street’s fourth-quarter expectations. They posted an EPS of $3.87 and revenues of $17.38 billion, representing a 4% bump in its top-line and an impressive $11.20 billion annual free cash flow. As we advance, with a projected free cash flow of $12 billion for 2024, IBM continues to affirm its position as a multifaceted powerhouse in the tech and cybersecurity spheres.

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