Take advantage of the tech stock selloff and bet by buying top cybersecurity companies with high retention rates
After almost a year of record runs, the stock market is currently in a cooling off period. As a result, the tech stocks that led the market to record gains fell, providing a prime entry point for investors. Valuations in the cybersecurity sector have fallen, making it a great time for investors to buy into the best cybersecurity stocks.
Cybersecurity stocks are characterized by the mission-critical nature of their underlying businesses. Many of the industry leaders have demonstrated the ability to effectively maintain and grow their user bases, boasting consistently increasing customer retention rates. The cybersecurity field continues to evolve, with new threats emerging every year. Additionally, cyberattacks can have a significant impact on your business, resulting in significant financial and operational losses. To put things into perspective, a massive hacking attack last year cost The Clorox Company a whopping $356 million.
With that said, here are the top three cybersecurity stocks to buy that are a bet on strong future earnings.
Best cybersecurity stock to buy: ZScaler (ZS)
Source: Miscellaneous goods photo / Shutterstock.com
Z scaler (New York Stock Exchange:ZS) is a cloud-based enterprise and network security provider that consistently reports strong revenue and bottom line growth. Additionally, this is absolutely across the board when it comes to its better-than-expected earnings and revenue performance dating back to the third quarter of 2019 (Q3). The company's cloud-native cybersecurity solutions have proven to be a huge hit with its growing customer base, keeping them safe from threats and breaches.
Additionally, with multiple catalysts in play, there is good reason to believe the company can continue to grow in line with historical metrics. One of the biggest reasons is increasing adoption among enterprise customers. In the most recent quarter, annual recurring revenue (After arrival) The percentage of customers who spent $100,000 and $1 million increased by 21% and 31%, respectively.
Additionally, it has made significant inroads into the federal market, boasting high annual contract values (ACV) recent growth. Regulatory mandates for stronger cybersecurity measures are unlikely to slow adoption among government agencies anytime soon. Looking forward, the company expects his fiscal 2024 sales to increase 31% and non-GAAP operating income to increase his 64%. Given these high expectations, we are on track to reach our long-term goal of $5. ARR is expected to reach $1 billion by 2028.
Microsoft (MSFT)
Source: The Art of Photography / Shutterstock.com
microsoft (NASDAQ:MSFT) may seem like an odd choice for cybersecurity, but it's definitely one of the best subtechniques in the field. Tech giants continue to offer investors new incentives to raise more stock. Generative AI's stock reached new heights last year, but cybersecurity could also be a long-term revenue stream for the company's business. Additionally, cybersecurity is likely to be a key expansion factor for ever-evolving software suites.
Products and services offered by the company include Microsoft Defender, Azure Security Center, and Microsoft 365 Security. Azure is a big part of the company's growth story, and it protects its cloud infrastructure through Azure Security Center. This includes solutions such as Active Directory for efficient access management. Additionally, the company advocates for cybersecurity reform and strengthens threat intelligence and research to support civilian and government agencies.
Octa (OKTA)
Source: Poetra.RH / Shutterstock.com
Octa (NASDAQ:Octa) is another major cybersecurity strategy that covers a variety of identity management solutions for both businesses and individual consumers. Like its peers, the company's financials are impressive, with double-digit sales growth and steady progress toward net income. However, while OKTA stock has historically lagged compared to its peers, recent results show it is bucking that trend.
Okta has a lot going on, and there's plenty of evidence that it will continue to grow at an accelerated pace. After last year's security incident, the company bounced back nicely and has delivered impressive results in recent quarters. Consistently high renewal rates in the mid-90s indicate strong and lasting customer relationships.
Okta is not resting on its laurels, as it is actively pursuing strategies to increase its market share in the coming quarters. Restructuring of the revenue model to improve sales productivity and focus on geographic expansion are the main drivers of sustained growth. The recent acquisition is Spera The launch of AI-driven solutions is a strategic move to further strengthen our influence in the identity security space.
On the date of publication, Muslim Farooq 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 writer and are subject to InvestorPlace.com Publishing Guidelines..
