Cybersecurity stocks to buy benefit from an incredibly cynical narrative: when bad things happen in the digital realm, the bullish case for the aforementioned sector rises.
Given this correlation, it’s easy to see why some folks have a conspiratorial view of the cybersecurity ecosystem. Not only that, the underlying narrative isn’t accretive or productive. In other words, the expenditures in protection against digital breaches don’t forward the underlying business. Rather, they allow the business to stay in business.
That’s not exactly a sexy tagline. However, an ounce of prevention is well worth a pound of cure in this ecosystem. On that note, below are cybersecurity stocks to buy.
Palo Alto Networks (PANW)
Based in Santa Clara, California, Palo Alto Networks (NASDAQ:PANW) falls under the infrastructure software industry. It’s one of the world’s top cybersecurity solutions providers, offering firewall appliances and software. Palo Alto brings to the table Panorama, a security management solution for the global control of network security platform as a virtual or physical appliance.
With no shortage of worldwide threats, PANW stock enjoys a reliable growth trek. Unsurprisingly, the underlying company’s financials are robust and consistent. Between its fiscal second quarter of 2023 to Q1 2024, it posted an average positive earnings surprise of 12.35%. In the trailing 12 months (TTM), Palo Alto generated net income of $2.45 billion on sales of $7.79 billion.
For fiscal 2024, experts believe earnings per share will rise 25.4% to $5.57. Further, revenue may reach $8 billion, implying year-over-year growth of 16.1%. For fiscal 2025, EPS could expand again to $6.21 with a consensus sales target of $9.12 billion.
With the threat profile constantly rising, these are believable numbers. Therefore, PANW ranks among the cybersecurity stocks to buy.
CyberArk Software (CYBR)
Based in Israel, CyberArk Software (NASDAQ:CYBR), along with its subsidiaries develops, markets and sells software-based identity security solutions and services in the U.S., Europe, the Middle East, Africa and other regions. One of its mainline products is Privileged Access Manager, which provides risk-based credential security and session access. With enterprises becoming increasingly vulnerable to data breaches, CyberArk should see sustained long-term demand.
Indeed, that’s not really much of a forecast. In the past four quarters since Q1 2024, the company’s average positive earnings surprise clocked in at nearly 112%. It must be said that over the TTM period, CyberArk posted a net loss of $26 million. However, this dynamic could change soon. Revenue during this time landed at $811.73 million. Further, the quarterly revenue growth rate (year-over-year) comes in at a robust 37%.
For fiscal 2024, analysts anticipate EPS to rise more than 80% to hit $2.02. On the top line, the metric could reach $939.33 million. If so, that would represent a 24.9% lift from last year’s tally of $751.89 million. Thus, CYBR ranks among the top cybersecurity stocks to buy.
Fortinet (FTNT)
Headquartered in Sunnyvale, California, Fortinet (NASDAQ:FTNT) provides cybersecurity and convergence of networking and security solutions worldwide. Primarily, it specializes in network firewall solutions along with encrypted applications. Relevant for the times, the enterprise also offers data loss prevention services and zero trust network access along with cloud security.
One of the criticisms regarding FTNT is that it hasn’t performed as well as other cybersecurity stocks to buy. For example, over the past 52 weeks, FTNT stock dipped almost 9%. On the other hand, shares of Palo Alto Networks returned nearly 55%. Still, it wouldn’t be right to dismiss FTNT altogether. After all, the underlying company is consistent, posting an average earnings surprise of 14.38% in the past four quarters.
During the TTM period, Fortinet posted net income of $1.2 billion on revenue of $5.4 billion. Quarterly sales growth presently stands at 7.2%. For fiscal 2024, experts forecast 8.6% growth in the bottom line to $1.77 EPS. On the top line, sales could reach $5.8 billion, representing a 9.3% YOY lift.
Finally, trading at 8.9X trailing-year revenue, it’s at a discount to PANW (14.62X) and CYBR (12.88X).
On the date of publication, Josh Enomoto 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.
