3 Cybersecurity Stocks That Could Be Multibaggers in the Making: April Edition


  • Here are some of the top cybersecurity stocks to buy and hold today.
  • Palo Alto Networks (PANW): Most of the bad news has been firmly priced into the stock.
  • Fortinet (FTNT): RBC Capital reiterated its hold rating on the stock.
  • Zscaler (ZS): Revenue is up 35.4% year over year — beat by $18.17 million. 
multibagger cybersecurity stocks - 3 Cybersecurity Stocks That Could Be Multibaggers in the Making: April Edition

Source: Shutterstock

We’re still not prepared for cyberattacks. That includes the U.S. government, hospitals, corporations and millions of people all over the world. Most recently, telecom Frontier Communications (NASDAQ:FYBR) was forced to shut down certain systems following an attack on when a third party “gained unauthorized access to portions of its information technology environment,” as noted by Seeking Alpha. All of which is creating a big opportunity for leading, multibagger cybersecurity stocks.

Small medical practices are being forced to close because of the February 21 Change Healthcare cyberattack. Also, according to the International Monetary Fund (IMF):

“The risk of extreme losses from cyber incidents is increasing. Such losses could potentially cause funding problems for companies and even jeopardize their solvency. The size of these extreme losses has more than quadrupled since 2017 to $2.5 billion. And indirect losses like reputational damage or security upgrades are substantially higher.”

Unfortunately, even after all of the attacks over the years, and warnings to be prepared, we’re still sitting ducks. All of which is creating big opportunities for leading, multibagger cybersecurity stocks.

Palo Alto Networks (PANW)

Palo Alto Networks (PANW) building with blue logo on side with blue sky backdrop
Source: Shutterstock

After gapping from about $370 to about $260, Palo Alto Networks (NASDAQ:PANW) is now consolidating around $282. From here, I’d like to see it initially retest $320. PANW is one of the top multibagger cybersecurity stocks to buy on weakness.

Just weeks ago, the company cut its full-year revenue guidance to a new range of $7.95 billion to $8 billion from $8.15 billion to $8.2 billion. It also cut its full-year billings outlook to a new range of $10.1 billion to $10.2 billion, from $10.7 billion to $10.8 billion. 

That’s why PANW fell apart. However, it appears most of that bad news has been firmly priced into the oversold stock. Plus, analysts at Argus just reiterated a buy on PANW with a price target of $336. All as the cybersecurity environment gets a bit more toxic, especially with generative artificial intelligence. 

Unfortunately, cybersecurity issues will only get worse. All because of how poorly prepared we are for attacks. Plus, with recent geopolitical issues, the threat only rises more. Considering PANW is the industry’s 800 lb. gorilla, it’s sure to benefit.

Fortinent (FTNT)

The Fortinet logo on a wall
Source: Sundry Photography / Shutterstock.com

We can also look at leading, multibagger cybersecurity stocks like Fortinet (NASDAQ:FTNT), which is technically oversold at $63.69. It’s also over-extended on RSI, MACD and Williams’ %R. The last time it became this technically oversold, it bounced from about $45 to 60 shortly after. The time before it bounced from about $56.10 to $65.68. I’m looking for a similar bounce back this time around, too.

Helping, RBC Capital reiterated its hold rating on the stock with a price target of $71 a share. We’ll also get a better idea of how FTNT is doing when it posts earnings on May 2. In its last earnings report, the company’s earnings per share of 51 cents beat by eight cents. Revenue of $1.42 billion — up about 11% year over year — beat by $10 million. Total billings came in at $1.86 billion, an 8.5% year-over-year jump from $1.72 billion.

For its first quarter, the company said it expects revenue to fall in the range of $1.3 billion and $1.36 billion, as compared to estimates for $1.38 billion. 

Zscaler (ZS)

Zscaler (ZS) logo on a corporate building
Source: Sundry Photography / Shutterstock.com

Keep an eye on oversold shares of Zscaler (NASDAQ:ZS), too.

After testing $259.61, it dropped to $170.97, where it’s now oversold on RSI, MACD and Williams’ %R. It’s also sitting at support dating back to November. The last time ZS became this technically oversold in May 2023, it bounced from about $90 to a high of $162.67. I’m hoping for a similar move again this time, too.

Helping, earnings have been strong.  In its second quarter, the company’s EPS of 76 cents beat by 18 cents. Revenue of $525 million — up 35.4% year over year — beat by $18.17 million. For fiscal year 2024, the company also expects to grow revenue by 31% year over year to $2.12 billion. It also expects for its operating income to come in around $397.5 million, with a margin of 18% to 19%, up from 15% in 2023.

Analysts at Macquarie also has an outperform rating on ZS with a price target of $245. The firm added that it’s one of two cybersecurity firms well-positioned to benefit from spending following the healthcare company hacks.

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.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/3-cybersecurity-stocks-that-could-be-multibaggers-in-the-making-april-edition/.

©2024 InvestorPlace Media, LLC