Cybersecurity remains an important and growing area of technology. Cyber threats and attacks are only growing as the world becomes more wired and interconnected. The consulting firm McKinsey & Co. has pegged the market opportunity for cybersecurity technology and service providers at $2 trillion. As a result, cybersecurity stocks are on the rise.
For corporations, cybersecurity is becoming an increasingly important cost of doing business. One need only look at the chaos caused at UnitedHealth Group (NYSE:UNH), the largest health insurer in the United States, after a cyberattack took down its technology unit Change Healthcare. The attack disrupted UnitedHealth’s payment system and forced it to provide $9 billion worth of loans to some partners. The company is forecasting a hit to its earnings this year of $2.05 per share.
Here are three cybersecurity stocks that could grow your wealth.
Palo Alto Networks (PANW)
The stock of Palo Alto Networks (NASDAQ:PANW) is recovering after suffering a big dip in this year’s first quarter. Year-to-date, PANW stock is up 15% and things look encouraging after the company’s first-quarter financial results. Long-term Palo Alto Networks remains one of the best cybersecurity stocks to own, having risen nearly 350% over the last five years. After dropping due to a decline in quarterly billings, PANW stock has recovered after its Q1 profit and sales figures beat analysts’ expectations.
Palo Alto Networks reported Q1 EPS of $1.32, which beat estimates of $1.25 per share. Revenue came in at $1.98 billion, which topped analyst expectations of $1.97 billion. The company’s sales were up 15% from a year earlier. While corporate spending on cybersecurity has dipped over the past year due to inflation and an uncertain economic environment, Palo Alto Networks sees that changing as interest rates move lower in the coming months.
CrowdStrike (CRWD)
Cybersecurity firm CrowdStrike Holdings (NASDAQ:CRWD) is having a very good year. Not only is CRWD stock up 45% since January, but it was added to the benchmark S&P 500 index on June 24, giving its share price a further boost as mutual funds and exchange-traded funds (ETFs) that track the S&P 500 are required to buy it. Over five years, CrowdStrike stock has risen nearly 330%, making it another long-term winner.
CrowdStrike stock popped 7% after the cybersecurity firm recently reported Q1 financial results that beat Wall Street estimates on the top and bottom lines. The company reported EPS of 93 cents, which was above the 89 cents expected among analysts who track the company’s progress. Revenue amounted to $921 million, up 34% from a year earlier and ahead of Wall Street estimates of $905 million. Subscription revenue, an important metric for the company, grew 34% to $872.2 million in Q1.
Alphabet (GOOG/GOOGL)
Alphabet (NASDAQ:GOOG/NASDAQ:GOOGL), the parent company of search engine Google, is pushing aggressively into the cybersecurity space. Media reports say that Alphabet is circling cybersecurity firm Wiz in what could be a $23 billion acquisition, the biggest deal ever for the tech giant. Wiz provides cybersecurity for cloud-computing platforms and services.
While purchasing Wiz would be Alphabet’s biggest deal ever, it would not be Alphabet’s first cybersecurity purchase. In 2022, Alphabet bought cybersecurity firm Mandiant for $5.4 billion. Alphabet executives have said that growing their cybersecurity offerings is a key focus of the technology giant. Alphabet recognizes the growing importance of cybersecurity, particularly for its Google Cloud unit and internet-connected smart home devices. GOOGL stock is up 30% year-to-date and has gained 220% over five years.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
