Cybersecurity stocks to buy on the dip is our topic for today. Shares of most cybersecurity firms outperformed the broader market early in 2022 following the Russian invasion of Ukraine yet failed to hold on to those gains amidst the selloff in tech stocks.
For instance, the First Trust Nasdaq Cybersecurity ETF (NASDAQ:CIBR), which invests in leading cybersecurity names, has declined 22% year-to-date (YTD). The ongoing selloff offers investors compelling opportunities to grab cybersecurity stocks at their most attractive valuations in years.
Rising geopolitical turmoil, high-profile ransomware attacks, and the work-from-home trend underscore the need for cybersecurity protection. According to the Identity Theft Resource Center, the number of data breaches set a new record in 2021, up 23% over the previous all-time high and 68% year-over-year (YOY).
Meanwhile, a recent survey by PricewaterhouseCoopers indicates close to 70% of businesses expect an increase in cyber spending this year. In fact, over a quarter predict a double-digit growth YOY. According to Global Market Insights, the global cybersecurity market is should reach $400 billion by 2027. Such an expansion would mean a compound annual growth rate (CAGR) of 15% from 2020.
Against this backdrop, here are seven cybersecurity stocks to buy on the dip in third quarter:
52-week range: $38.96 – $221.64
Content delivery network (CDN) Cloudflare (NYSE:NET) offers products to protect and accelerate websites, apps, and application programming interfaces (APIs). Metrics highlight “81.2% of all websites that use a CDN or reverse proxy rely on Cloudflare.”
The cloud services provider announced first-quarter results on May 5. Revenue came in at $212.2 million, up 54% YOY. Adjusted net income stood at 0.01 cent per diluted share, compared with a net loss of 0.03 cents a year ago. Cash and equivalents ended the period at $160 million.
The company added more than 14,000 new paying customers, a quarterly record. Customers paying over $100,000 jumped 63%, while those spending over $1 million a year grew 72%, YOY.
In June, Cloudflare announced several new capabilities for Cloudflare One, its Zero Trust SASE platform. New features include sophisticated email security protection, data loss prevention tools, cloud access security broker (CASB), and private network discovery. Wall Street will be paying attention to how Cloudflare One can contribute to top line growth.
NET stock has tumbled 63% YTD. Shares are trading at 22 times sales. Meanwhile, analysts’ 12-month median price forecast stands at $80.
52-week range: $48.73 – $74.35
The cybersecurity vendor released Q1 financials on May 4. Revenue totaled $954.8 million, up 34% YOY. Diluted earnings per share (or EPS) came in at 94 cents, up from 81 cents in the prior-year period. The company generated a free cash flow of $273.5 million, while cash and equivalents ended the quarter at $923.5 million.
In early May, Fortinet announced a suite of new FortiGate appliances to support diverse data center environments. Furthermore, management will collaborate with Singapore’s Quantum Engineering Programme (QEP) to safeguard digital transactions against sophisticated cyber threats.
So far in 2022, FTNT stock has declined almost 20%. Shares are priced at 60 times forward earnings and 14.2 times sales. Wall Street’s 12-month median price forecast is at $70.80.
Juniper Networks (JNPR)
52-week range: $26.12 – $38.14
Juniper Networks reported Q1 results on April 26. Revenue stood at $1.17 billion, up 9% YOY. Adjusted net income came in at 31 cents per diluted share, up from 30 cents a year ago. Cash and equivalents ended the period at $1.67 billion.
Management recently announced Indonesia’s mobile telecommunications company XL Axiata would implement Juniper’s cybersecurity solutions to enhance its existing network infrastructure. Internet Initiative Japan also selected Juniper Networks’ virtual firewalls to enable seamless and secure experiences for its new cloud network service.
JNPR stock has dropped 21% since the beginning of the year. The dividend yield is a hefty 2.96%. Shares are changing hands at 14.5 times forward earnings and 2 times sales. Meanwhile, analysts’ 12-month median price forecast stands at $33.50.
52-week range: $77.01 – $276.30
Okta (NASDAQ:OKTA) focuses on personal identity and access management. Its Okta Identity Cloud platform offers identity management solutions that allow customers to secure their users and connect them to technology and applications.
The software company released Q1 FY23 results in early June. Okta saw total revenue grow by 65% YOY to $415 million. However, net loss widened to 27 cents per diluted share, from a loss of 10 cents a year ago. Cash and equivalents ended the period at $2.49 billion.
For Q2, management forecasts total revenue of $428 million to $430 million. Such as expansion would mean a growth rate of 36% YOY.
A recent report reveals the global market for identity and access management will reach almost $13 billion in 2022 and exceed $26 billion by the end of 2028. Analysts expect Okta to benefit from this growth.
So far in 2022, OKTA stock has lost more than 56%. Shares are trading at 10.7 times sales. Wall Street’s 12-month median share price forecast is at $140.
52-week range: $97.02 – $150.10
Qualys (NASDAQ:QLYS) offers cloud security and compliance solutions. The Qualys Cloud Platform helps businesses simplify security operations. It enjoys a market share of 4.5% in the endpoint security space.
The cloud security specialist announced Q1 results on May 4. Revenue came in at $113.4 million, representing a 17% YOY increase. Net income was 89 cents per diluted share, up from 74 cents in the prior-year period. Cash and equivalents ended the quarter at $167.5 million. Management forecasts Q2 revenue to reach $117.53 million, representing an almost 18% increase YOY.
In early June, Qualys announced the release of Vulnerability Management, Detection and Response (VMDR) 2.0 with TruRisk. This new cloud-based solution gives insights into an organization’s risk status along with the ability to orchestrate responses.
QLYS stock has declined 11% YTD. Shares are trading at 41 times forward earnings and 12.4 times sales. Meanwhile, analysts’ 12-month median price forecast stands at $136.50.
52-week range: $18.64 – $78.53
Cybersecurity platform SentinelOne (NYSE:S) uses AI algorithms to automate the threat detection process across a given network. Within the endpoint protection segment, its market share is around 4.7%.
SentinelOne issued Q1 FY23 results in early June. Revenue jumped an impressive 109% YOY to $78.3 million. Net loss came in at 21 cents per diluted share, compared to a net loss of $1.06 per share the previous year. Cash and equivalents ended the quarter at $1.6 billion.
The cybersecurity name saw total number of customers increase 55% YOY to 7,450. Meanwhile, the number of customers generating over $100,000 in annual recurring revenue (or ARR) soared 113% to 591. As a result, the dollar-based net revenue retention rate was a robust 131%. Management forecasts Q2 revenue to increase 107% to 110% YOY.
Meanwhile, SentinelOne recently completed the acquisition of Attivo Networks, the identity security and lateral movement protection company. Investors will pay close attention to how Attivo can contribute to SentinelOne’s top line.
So far in 2022, S stock has fallen 53%. Shares are changing hands at 29 times sales. Wall Street’s 12-month median price forecast is at $36.
52-week range: $155.25 – $257.03
Verisign (NASDAQ:VRSN) is a global provider of domain name registry services and internet infrastructure. It provides root zone maintainer services. These authoritative name servers are “a network of hundreds of servers in many countries around the world.” Furthermore, Verisign provides registration services for the .com and .net top-level domains.
The internet group released Q1 results on April 28. Revenue grew 7.2% YOY to $347 million. Diluted EPS came in at $1.43, up 7.5% YOY from $1.33 a year ago. Cash and equivalents ended the period at $1.21 billion.
In late June, Verisign reported the first quarter closed with 350.5 million domain name registrations across all top-level domains, an increase of 8.8 million domain name registrations, or 2.6%, compared to the previous quarter. Management anticipates revenues to increase by 7.1% and 7.9% in 2022 and 2023, respectively.
VRSN stock has dropped more than 30% since the beginning of the year. Shares are trading at 30 times forward earnings and 15 times sales. Meanwhile, analysts’ 12-month median price forecast stands at $210.
On the date of publication, Tezcan Gecgil, Ph.D., 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.