Cybersecurity stocks are capturing the spotlight as high-profile hacking incidents escalate.
Moreover, with the buzz around artificial intelligence (AI) intensifying, investor interest in cybersecurity solutions continues to surge. Furthermore, anticipated federal government spending boosts in 2024 should propel the cybersecurity sector even further. In an era where digital threats are becoming increasingly sophisticated, cybersecurity companies play a critical role in safeguarding both business owners and customers from potential cyberattacks.
Furthermore, for investors looking to contribute to the industry’s growth while aiming for solid returns, top cybersecurity stocks present an attractive avenue. The shift of many businesses towards online operations has enhanced top-line growth and productivity. However, this digital expansion has also introduced vulnerabilities, highlighting the critical need for advanced cybersecurity defenses.
Cybersecurity Stocks: Fortinet (FTNT)
Fortinet (NASDAQ:FTNT) is a seasoned titan in the cybersecurity arena, which continues to dazzle the market with its robust financial health and innovative solutions. Its impressive suite of software and services has become a bulwark against cyber threats for businesses on a global scale. Moreover, its financial performances are a testament to its operational excellence, showcasing an enviable A-graded margin profile.
Fortinet’s latest earnings report sent ripples through Wall Street, marked by a 10.3% year-over-year (YOY) revenue growth in the fourth quarter of 2023. The drag from product revenue was offset by the 24.8% surge in service revenue, highlighting a strategic pivot that’s paying many dividends.
The buzz around Fortinet intensifies as it posts an 8.5% year-over-year bump in billings, signaling robust demand for its cybersecurity solutions. Additionally, this performance overshadows the previous quarter’s 5.7% billing growth rate and positions the firm as a beacon of growth and resilience in the tech sphere. With its net income hitting $392 million and shares soaring by 20% year-to-date (YTD) and an astonishing 113% over the past three years, FTNT stock is a no-brainer cybersecurity bet.
Cloudflare (NET)
Cloudflare (NYSE:NET) is effectively reshaping the digital landscape with its expansive platform, connecting more than 13,000 networks to bolster website performance and fend off cyber threats. At the heart of the company’s success is its unwavering commitment to ensuring swift website load times, a key factor for retaining consumer interest. In today’s fast-paced world, even a slight delay can drive potential customers away, potentially costing businesses millions in lost sales. This focus on speed and robust cybersecurity measures have propelled Cloudflare to become a beacon in the tech sector.
The company’s growth is fueled by a steadily expanding client base, comfortably surpassing 189,000 paying customers. Moreover, it boasts significant revenue contribution from more than 2,756 large customers, marking a 35% YOY increase. The fourth quarter of 2023 alone witnessed a 32% surge in sales, alongside the signing of Cloudflare’s largest new customer and renewal contract to date. Looking forward, Cloudflare sets its sights on achieving $1.65 billion in revenue for fiscal 2024, indicating a robust 26.9% growth rate from the prior-year period.
Zscaler (ZS)
Zscaler (NASDAQ:ZS), stands at the forefront of cloud-based security, revolutionizing how businesses protect their digital assets. With its robust platform, Zscaler effectively secures navigation through cloud resources. Moreover, its unique software architecture offers a robust security environment trusted by a roster of 7,700 clients. Moreover, the bulk of these clients are heavy hitters, each contributing over $1 million in annual recurring revenue (ARR).
Zscaler’s first-quarter performance shattered expectations, with non-GAAP earnings per share hitting 67 cents, 18 cents above estimates, and revenue reaching $496.7 million, marking a stunning 39.7% YOY jump. Looking ahead, Zscaler sets its sights even higher with second-quarter revenue projections between $505 million and $507 million, forecasting a robust 30.5% growth YOY.
Moreover, its ambitious goal for the fiscal year ranges between $2.09 billion to $2.10 billion, underscoring its management confidence in the growing demand for its services. Despite its remarkable growth, ZS stock has risen by 14.3% year-to-date and an astonishing 405% over the past five years, yet it trades at a discount relative to its historical averages. This discrepancy signals a potentially lucrative opportunity for investors in ZS stock.
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
