Cybersecurity stocks to lock down now
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Cybersecurity is a critical service that prevents problems like malware erasing a system, your database being broken into, or the theft of personal information. It protects data, networks, and devices while ensuring the integrity, confidentiality, and availability of information.
Spending on cybersecurity has grown due to the COVID-19 pandemic because remote work has rapidly expanded. Cybersecurity companies have grown as well. These companies serve various customers, including individuals, the government, and businesses.
Although cybersecurity stocks have underperformed in the broader market over the past year, they are expected to grow due to the increasing need for cybersecurity services.
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7 cybersecurity stocks worth investing in
Fortinet (FTNT)
Fortinet is one of the biggest cybersecurity companies globally by revenue and market cap. It provides hardware for data center security and is a top provider of firewalls.
The company recently announced a new software-based internet security product and a partnership with Singapore’s Quantum Engineering Programme to develop security for quantum computing.
Fortinet’s third-quarter sales were $1.15 billion, up 33% year over year. This growth was primarily due to product sales. Fortinet also saw strong growth in software-defined wide-area networking and operational technology.
CrowdStrike (CRWD)
CrowdStrike Holdings is a cloud-based company that provides endpoint security, which helps protect networks and devices. The company uses machine learning to detect security breaches and threats.
It also offers breach remediation and proactive testing services. CrowdStrike is easy to deploy and can reach many users due to its cloud-based platform. As more employees work remotely and additional companies pivot to a hybrid-cloud system, CrowdStrike could continue to grow.
Although it is trading at $117.65, far from its 12-month high of $242.00, its one-year target estimate is $232.73.
Akamai (AKAM)
Akamai is a Content Delivery Network (CDN), not a traditional cybersecurity company. However, it offers a suite of security products and services.
CDNs help ensure that data is transmitted securely. Since there is an increasing amount of information traveling across the internet, CDNs are becoming more important.
Akamai is one of the leading CDNs. The company also develops edge computing technology, which moves data from centralized data centers to end users.
In 2021, Akamai acquired Israel-based Guardicore. It then acquired the cloud infrastructure platform Linode in 2022. These acquisitions may have contributed to the 3% third-quarter revenue growth year-over-year.
Okta (OKTA)
Okta uses zero-trust architecture to manage identity and access. Zero-trust architecture requires users to verify their identity before accessing data and applications.
The company’s two target markets are its workforce identity offerings and its customer identity offerings. Its workforce offerings allow employees to access a company’s cloud-based and on-premises resources securely. In contrast, its customer identity offerings enable a client’s customers to access the client’s applications securely.
Although Okta has been an underperformer, its use for managing security and logins for remote workers makes it a strong competitor with long-term potential for growth or a takeover.
Cloudflare (NET)
Cloudflare is a newer CDN provider. It focuses on edge computing. This is a distributed IT architecture where client data is processed as close to the originating source as possible.
Although Cloudflare’s stock price dipped more than 10% after it shared its earnings results, the company has a strong foothold in cybersecurity and an opportunity to excel in the growing edge computing space.
Cisco Systems (CSCO)
Cisco Systems is a well-known hardware manufacturer. The company provides network security products and services for businesses, governments, telecom, and other sectors.
First-quarter sales for Cisco rose 6% year over year to $13.6 billion. This growth was primarily fueled by enterprise networking and cybersecurity. Since it is a hardware company, it relies on supply markets.
However, we expect margins to improve, especially once Cisco’s pricing increases take effect.
Booz Allen Hamilton (BAH)
Booz Allen Hamilton Holding Corp. is a holding company that provides management and technology consulting services to the U.S. government. The company offers cloud computing, cybersecurity, and engineering consulting and services. These are primarily geared toward defense and intelligence operators.
Booz Allen Hamilton’s FY23 Q1 results showed that net income rose by 49.9% as revenue grew by a smaller margin year over year.
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Other ways to invest in cybersecurity
Demand for cybersecurity products and services remains steady, even in a rough economic climate. If you want to invest in cybersecurity companies but aren’t currently looking to invest in a single stock, you could opt for ETFs, mutual funds, and robo-advisor portfolios.
However, it’s essential to do your research before investing to ensure you know what you’re buying and the potential risks.
Should you invest in cybersecurity?
Grandview Research found that the global cybersecurity market was valued at $184.93 billion in 2021 and is expected to grow by 12% annually from 2022 to 2030. Investing in the cybersecurity industry could pay off financially.
Nevertheless, not all cybersecurity companies have seen growth recently. Cybersecurity companies are also at risk for hacks, which could drastically and quickly cause a company’s stock to plummet.
Related: 5 best solar energy stocks to power your portfolio
Bottom line
The cybersecurity industry is hot right now. It is projected to grow as hybrid work environments become the norm and things like data breaches become more frequent.
If you know which cybersecurity companies to invest in, they can yield good returns in the coming years.
Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time.
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