3 Strong Buy Cybersecurity Stocks to Add to Your Q2 Must-Watch List


  • Explore strong buy cybersecurity stocks offering sustainable growth as the market is projected to hit $314.28 billion by 2029 amid rising attacks.
  • CrowdStrike Holdings (NASDAQ: CRWD): With a 411% five-year return, CrowdStrike’s flywheel effect ensures a continuous improvement in cybersecurity solutions, making it an appealing investment amidst rising cyber threats.
  • Palo Alto Networks (NASDAQ: PANW): Demonstrating a robust YOY revenue growth and increased full-year guidance, Palo Alto Networks leads with advanced threat detection technology, making it a solid choice for future-proof cybersecurity investment.
  • Zscaler (NASDAQ: ZS): Capitalizing on the shift towards Zero Trust architecture, Zscaler’s impressive quarterly performance and positive outlook in a growing remote work environment make it a promising investment.
strong buy cybersecurity stocks - 3 Strong Buy Cybersecurity Stocks to Add to Your Q2 Must-Watch List

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Cyberattacks are increasing in sophistication and frequency. CrowdStrike’s (NASDAQ:CRWD) 2024 Global Threat Report highlights a concerning increase in covert activity within the cyber threat environment, with a notable surge in cloud incursions by 75%. In the middle of these increasing attacks, cybersecurity stocks rated a strong buy offer healthy sustainable growth for prospective investors.

These stocks offer the potential to take advantage of a growing market, projected by Mordor Intelligence to reach $182.84 billion in 2024 and increase at a Compound Annual Growth Rate (CAGR) of 11.44% to reach $314.28 billion by 2029.

The first company selected boasts a five-year return of 411% and a self-reinforcing platform benefitting from a flywheel effect. The second pick is recognized as a leader in the Gartner Magic Quadrant for Endpoint Protection Platforms. With the growing popularity of remote work following the pandemic, the last stock provides software infrastructure that is seeing increasing adoption thanks to this shift. In addition, all three of the stocks hold a consensus strong buy recommendation.

CrowdStrike Holdings (CRWD)

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Crowdstrike Holdings (NASDAQ:CRWD) is one of the best-performing cybersecurity stocks, with a five-year return of 411%. The outstanding price momentum is due to robust demand for cybersecurity solutions and strong execution on the bottom line, as ransomware and hacking risks continue to rise.

CrowdStrike’s security platform benefits from a flywheel effect, which helps it grow organically exponentially. The company continuously leverages data collected from its extensive customer base to improve its cybersecurity products. As more customers use the platform, it gets more data, which enhances its security algorithms. In turn, this draws more customers, leading to more data analysis.

As a result of this continuously improving platform, CrowdStrike is becoming the go-to choice for cybersecurity clients. The endorsement of governmental agencies such as the Cybersecurity and Infrastructure Security Agency (CISA) adds a further layer of legitimacy. Offerings such as Falcon XDR, which is on the government’s GovCloud, are considered important in protecting against attacks from hostile nations.

On the business side of things, CRWD outperformed Wall Street in its fiscal year 2024 earnings report and hiked its full-year outlook, demonstrating, once again, its strong market position and financial standing. The latest financial results mark 12 quarters in a row the cybersecurity stock beat analyst expectations.

CrowdStrike Holdings holds a “Strong Buy” consensus rating with an estimated upside potential of around 20%.

Palo Alto Networks (PANW)

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Palo Alto Networks (NASDAQ:PANW) is another strong performer among strong buy cybersecurity stocks. But the stock is in the red this year in terms of returns, thanks to mixed recent financial results.

The cybersecurity stock reported solid results for its fiscal second quarter, with EPS ($1.46 adjusted vs. $1.30 expected) and revenue ($1.98 billion vs. $1.97 billion expected) both beating Wall Street estimates. Net income rose significantly higher to $1.7 billion ($4.89 per share) compared to $84 million ($0.25 per share) last year. However, the company cut its full-year billings and revenue outlook, and its next-quarter guidance fell below analyst expectations.

CEO Nikesh Arora said the updated outlook is the result of a strategic change intended to position the firm as a leader in AI, accelerate growth, and prepare for difficulties from a “difficult customer.”

On a brighter note, Palo Alto Networks released PAN-OS 11.0 Nova. The release aims to detect 60% more injection attacks and stop 26% more zero-day malware than conventional sandboxes.

The move builds on an already impressive reputation for one of the best strong buy cybersecurity stocks. Gartner’s 2023 Magic Quadrant for Endpoint Protection Platforms named Palo Alto Networks a leader due to its Cortex XDR technology. This technology enables full endpoint threat prevention by combining data from several sources to identify and respond to assaults.

Apart from this organic growth, Palo Alto Networks is also active in terms of M&A. Two recent acquisitions, Talon Cyber Security for $435 million and Dig Security for around $232 million, illustrate Palo Alto’s commitment to expansion.

Analysts present a ‘Moderate Buy’ consensus for PANW stock, with an estimated upside of 17% to a target price of approximately $336, up from the last price of about $287.

Zscaler (ZS)

Zscaler (ZS) logo on a corporate building
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It’s not unexpected that Zscaler (NASDAQ:ZS), which has had a 175% return over the past five years, is making news again after achieving impressive quarterly results, given how quickly its Zero Trust architecture is being adopted.

Zscaler reported earnings and revenue that topped analysts’ expectations in Q2 FY24. Billings also exceeded expectations, $628 million instead of $611 million. With regard to Q3 earnings, the cybersecurity business anticipates earning between 64 and 65 cents per share on revenue of between $534 million and $536 million. A key reason for these solid results is the Zero Trust architecture.

The Zscaler platform is designed specifically for a time when working remotely is becoming common. It ensures safe internet surfing, safe app access, and safe app access across many devices and locales. The number of remote workers is growing astounding, going from 20% in 2020 to 28% in 2023, mostly due to the pandemic. In these circumstances, Zscaler is one of the best strong buy cybersecurity stocks thanks to its advanced architecture.

Analysts have a “Strong Buy” consensus on Zscaler stock, with 26 buys. The stock’s average target price is $261, marking a roughly 34% potential increase from the last price of $195.

On the publication date, Faizan Farooque did not have (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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

Article printed from InvestorPlace Media, https://investorplace.com/2024/03/3-strong-buy-cybersecurity-stocks-to-add-to-your-q2-must-watch-list/.

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