With the rise in cyberattacks, these cybersecurity stocks could benefit if you buy now
Cybersecurity stocks are in a difficult situation. Many cybersecurity companies that have dominated the stock market since the pandemic (and even before) have lost momentum.
Missed profits, declining guidance and bubbly valuations abound in the industry. This combination of factors makes finding quality cybersecurity stocks more difficult, especially for pure investing. While many companies are experiencing a slowdown, the cybersecurity industry is here to stay. It is expected to achieve a compound annual growth rate of 12.3% until 2030.
Businesses need to protect themselves from hackers. Too much data and assets are at risk. These three cybersecurity stocks to buy now are companies that can protect your business and generate long-term returns for your shareholders.
Crowd Strike (CRWD)
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cloud strike (NASDAQ:CRWD) is one of the best cybersecurity stocks to buy right now for investors who don't mind high valuations. Unlike most of its competitors, Crowdstrike is still growing at an incredible rate. The cybersecurity company recently reported a 33% year-over-year increase in revenue for the fourth quarter of 2024. Guidance suggests that revenue growth remains strong.
The company generates a significant portion of its revenue through a recurring business model. Annual recurring revenue increased 34% year over year to $3.44 billion. The company also expanded its margins, with GAAP net income of $53.7 million, compared to his GAAP net loss of $47.5 million in the year-ago period.
Investors have noticed this and continue to add to the stock. The stock is up 25% since the beginning of the year and trades at a forward P/E of 78. If profit margins continue to expand significantly, the stock's valuation could rise as well. The cybersecurity industry's favorable compound annual growth rate and competitive weakness suggest that CrowdStrike can capitalize on this opportunity.
Palo Alto Networks (PANW)
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palo alto networks (NASDAQ:Panwoo) used to attract attention as a cybersecurity stock until its recent earnings report caused its stock price to decline. The stock is down 3% since the beginning of the year, but is up 240% over the past five years.
Revenue for the second quarter of 2024 increased 19% year-over-year, but the growth rate was lower than in prior quarters. The company had posted 25% year-over-year revenue growth in the previous quarter. Palo Alto Networks generated pretax income of $135.5 million during the quarter. It is important to take advantage of this distinction, as the company benefits from income taxes to the tune of $1.6 billion. That's why the company's net income has ballooned to $1.7 billion on a GAAP basis, but that's not an accurate measure of stock price.
Pre-tax income increased from $118.8 million in the second quarter of 2023 to $135.5 million in the most recent quarter. This is a 14% year-over-year growth rate. The company expects revenue growth in the third quarter of fiscal 2024 to be between 13% and 15%.
A significant drop could be a long-term buying opportunity. The stock's average rating is a “moderate buy,” suggesting 20% upside potential. The price targets after recent earnings results are generally positive, indicating that the stock price could rise by more than 20%.
Microsoft (MSFT)
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microsoft (NASDAQ:MSFT) is not a pure cybersecurity stock, but it has a lot to offer. Most of the company's revenue comes from cloud computing. This platform helps businesses operate efficiently, but it is also a digital resource that businesses must protect.
The tech giant has a suite of cybersecurity software and recently announced Copilot for Security to increase its market share. This feature makes cybersecurity more accessible to individuals and small businesses. Copilot is the company's artificial intelligence tool with many users. It's not just for cybersecurity. The company's recent innovations will likely increase adoption of Copilot.
The company's stock has outperformed the stock market for years, rising 225% over the past five years. Analysts are bullish on the stock, believing it could rise 12% from current levels. 35 analysts rate the stock as a “strong buy.” The recent price target hike suggests the stock could rise more than 12%. The highest price target of $550 per share represents a 30% return.
On the date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
