According to Statista, the cybersecurity industry is expected to be worth just under $300 billion in 2022 and approach $540 billion by the end of the decade. This highlights how seriously companies take protecting themselves and their data from hackers and malicious actors.
For long-term investors, this is an opportunity not to be missed. Companies that provide next-generation security solutions have the potential to grow for years to come.
palo alto networks (NASDAQ:PANW), sentinel one (NYSE:S)and fortinet (NASDAQ:FTNT) There are three cybersecurity stocks that fit this description. Long-term investors should consider buying this month.
Here's why:
1. Palo Alto Networks is a long-awaited buy after a dip.
Palo Alto Networks is a cybersecurity company specializing in firewall security. A firewall is like a security guard at a wedding, checking the invitations to make sure no one gets in, like that crazy ex-boyfriend. In technology, firewalls monitor incoming and outgoing network traffic. The company's business spans his three divisions: Network Security, Cloud Security, and Security Operations.
The company recently announced its fiscal 2024 second quarter earnings. The stock price fell sharply, primarily due to soft guidance showing year-over-year sales growth slowing to 13% to 15% next quarter from 19% in the second quarter. . Additionally, next quarter's billings are expected to increase by only 2% to 4%.
Management is moving the business to an integrated platform model, where everything they sell falls under one product. Management believes that customer desire to consolidate IT budgets is temporarily impacting revenue growth.
This can be considered a speed bump and worth noting. However, analysts remain very optimistic about the business, expecting earnings growth to average more than 26% per year over the next three to five years. This growth has given it a forward P/E of 51, making it a reasonable price tag for long-term investors.
2. Improving SentinelOne's financial condition may cause its stock price to rise
SentinelOne focuses squarely on the next-generation security conversation. Use artificial intelligence (AI) to plan and proactively explore suspicious device files instead of waiting to respond to threats. This technology has received high praise from third-party consulting firms such as: gartner And Mitre. SentinelOne started with endpoint security protecting network-connected devices, but has expanded into cloud and identity security over the past two years.
The business has grown significantly since going public nearly three years ago, with revenue of $573 million in the past four quarters. The company is rapidly approaching the $1 billion milestone and its financial position is improving.
SentinelOne isn't profitable yet, but it's trending in the right direction with cash burn of just $30 million last quarter. The company has $800 million in cash and zero debt, so there is no need to worry about raising capital.
The lack of profits made the stock price unfavorable. Its price-to-sales (P/S) ratio is only 10, half that of its more profitable direct competitors. crowdstrike holdingswill be traded at. Investors who buy today could enjoy appreciation in valuation as SentinelOne continues to move towards profitability.
3. Fortinet isn't cheap, but it's still worth checking out.
Fortinet is a diversified security company. The company sells a variety of security solutions across his three divisions: Unified SASE, Security Operations, and Secure Networking. According to Gartner's Magic Quadrant system, the company is a leader in network firewall and SD-WAN security, and is ranked in six quadrants. This diversity means Fortinet has a large presence in the market. We currently work with 76 Fortune 100 companies and 69% of the Global 2,000 companies.
The company increased sales by 20% in 2023, but growth has slowed to just 10.3% year-on-year in the fourth quarter. Management is pegging growth at just under 10% in 2024, so it's not growing as fast as some of its peers. However, the company is more mature and profitable than other companies.
Analysts expect profits to grow by an average of 16% annually over the next three to five years. The business will generate nearly $6 billion in revenue this year. Management believes that the long-term addressable market could grow to $208 billion by 2027.
Meanwhile, the stock trades at 42 times expected 2024 earnings. Although this is not a bargain considering its earnings growth rate in the low teens, Fortinet remains one of the most prominent companies in a growing industry that is in high demand.
Consider adding one or all of these stocks to a diversified long-term portfolio. Cybersecurity is notoriously complex and competitive, so it's wise to invest in multiple players.
Should you invest $1,000 in Palo Alto Networks right now?
Before buying Palo Alto Networks stock, consider the following:
of Motley Fool Stock Advisor Our analyst team has identified what they believe Best 10 stocks What investors can buy right now…and Palo Alto Networks wasn't among them. These 10 stocks have the potential to generate impressive returns over the next few years.
stock advisor We provide investors with an easy-to-understand blueprint for success, including guidance on portfolio construction, regular updates from analysts, and two new stocks every month.of stock advisor Since 2002, the service has more than tripled S&P 500 returns*.
See 10 stocks
*Stock Advisor returns as of March 11, 2024
Justin Pope has a position at SentinelOne. The Motley Fool has positions in and recommends CrowdStrike, Fortinet, and Palo Alto Networks. The Motley Fool recommends his Gartner. The Motley Fool has a disclosure policy.
3 Top Cybersecurity Stocks to Buy in March was originally published by The Motley Fool
