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Cybersecurity continues to be one of the hottest areas.
This represents a growing need in the emerging era of AI, which is growing almost exponentially. Threats are becoming increasingly sophisticated. Therefore, cybersecurity is no longer a 'nice to have', especially for organizations managing remote/hybrid workforces. This is especially true in the rapidly growing Zero Trust space.
Unlike many sectors, it's difficult to find cybersecurity stocks that are undervalued by traditional metrics. Last year, there was a strong flow of money into cybersecurity stocks. And the sector itself has a median price-to-earnings ratio (PER) ratio is approximately 32 times, S&P500.
Moreover, many of these companies are not yet profitable. So let's take a look at three of the most undervalued cybersecurity stocks to buy in April 2024.
Z scaler (ZS)
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Based in San Jose, California Z scaler (New York Stock Exchange:ZS) is a zero trust platform suitable for defending against the growing threats emerging from generative AI. Unlike “traditional” phishing scams from just 18 months ago, generative AI is creating increasingly realistic content that can fool even alarming employees.
However, Zscaler's platform includes identity security that treats every online login attempt as an adversarial threat (i.e. zero trust) and analyzes credentials such as the user's location and the device being used. . Zero Trust Exchange also connects employees only to the applications they need to do their jobs, preventing evasive threats from gaining access to the broader network.
Until recently, Zscaler wouldn't have compiled a list of the most undervalued cybersecurity stocks to buy in April. Like many stocks in the sector, ZS stock is up 64% since the beginning of the year. However, last month's 20% drop could make this stock even more attractive.
The reason for the withdrawal was the company's performance, which is a little surprising since the company's performance was not bad at all. The company doubled its earnings forecast. Revenue for his first two quarters of fiscal 2024 was up 37% year over year. The company also beat analysts' expectations for full-year earnings.
Octa (OKTA)
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One way to protect against emerging AI threats is to use AI-driven solutions.That's the general bullish premise. Octa (NASDAQ:Octa). In October 2023, Okta introduced Okta Workforce Identity Cloud, built and powered by Okta AI. The program goes beyond a user's initial login and “continuously assesses a user's risk throughout an active session,” automatically responding to identity threats across a company's network.
OKTA stock was a laggard among cybersecurity stocks. It's only up about 20% in the past 12 months. And despite a solid earnings report in which the company beat expectations on sales and bottom line, the stock has fallen 2.5% over the past month.
However, since the company's earnings report, at least a dozen analysts have reiterated or raised their ratings and price targets for OKTA stock. So while investors may want to wait for a better entry point, an attractive setup is emerging.
Tenable Holdings (TENB)
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Tenable Holdings (New York Stock Exchange:Tenbu) has a customer base of 44,000 customers, accounting for 65% of its customer base. fortune 500. This shows how big the pie is for companies in this space.
This mid-cap stock follows a similar pattern to the other two stocks on this list. The company has shown strong year-on-year growth (YoY comparison) Earnings and Earnings. Six analysts have either upgraded their ratings or raised their price targets on TENB stock since the company last announced its earnings results.
The most relevant of these ratings may be the one published by Needham & Company on March 19, 2024. The company reiterated a buy rating on the stock, along with a price target of $62. This comes on the same day that Tenable announced enhancements to its Tenable Cloud Security cloud-native application protection platform (CNAPP) Supports Kubernetes on-premises and public cloud environments.
On the date of publication, Chris Marcoci did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.
