Businesses and countries are increasingly aware of the growing challenge of securing their digital infrastructure from compromise. As a result, cybersecurity has become a highly essential advanced technology in the modern era, such that the impact of conventional warfare is exponentially multiplied by cyber warfare. A case in point is the invasion of Ukraine by Russia in early 2022.
As the internet evolves into Web3 and 5G networks continue to litter the landscape, cybercriminals are eager to spot loopholes to steal confidential data to steal information from individuals and organizations. But, cybersecurity businesses that create cybersecurity solutions have become a hot investment item.
These companies now offer lucrative stocks, helping investors to earn profits from a stable worldwide tech market. In addition, a top consulting firm, Gartner, estimates that cybersecurity spending will swell by roughly 10.4 percent year on year, reaching $225 billion by 2025. Like others, Matthew Hedberg, an RBD Capital Markets analyst, suggests that the new hybrid workspace necessitated by companies transitioning to hybrid and remote work is the catalyst for this expected growth.
Pandemic-powered economic shutdowns have ensured that businesses rapidly adapt and acquire digital-first methods and infrastructure to keep work outside office walls. Thus, the increasing and expected reliance on cloud-based infrastructure and tools increases cybersecurity challenges.
This article reviews the top four cybersecurity stocks worth investing your money in.
Palo Alto Networks (NYSE: PANW)
Ever before cloud technology became something worth talking about in enterprise infrastructure, Palo Alto Networks had carved a deep niche in firewalls to protect traffic in and out of physical locations such as data centers and offices. Its legacy services are still in high demand, but the cloud is obviously where its future lies.
Palo Alto Networks’ high-profit platform has helped it make acquisitions that include no less than six competing cloud-native businesses over the last few years. So naturally, therefore, the company has thoroughly redefined its business to reflect the latest realities in cybersecurity.
According to management, there’s not much to expect in terms of new acquisitions. However, the outlook is good – a princely double-digit percentage revenue growth in the coming years.
While other cybersecurity companies have a higher valuation, Palo Alto Networks continues to blaze the trail as the largest pure-play cybersec firm by revenue. As a leading cloud security provider, it remains competitive in cybersecurity despite being a legacy business.
Palo Alto shares trade for a relative value compared to the younger cloud-native upstarts. It’s, ironically, giving a run for their money.
At a market cap of $44.77 billion, CrowdStrike Holdings Inc. is renowned for its cloud-first solutions. Besides the endpoint, these products aim for cloud workload protection at the global level.
CrowdStrike’s Falcon platform is available to consumers through a SaaS subscription model for cloud security, endpoint security, managed services, and threat intelligence. It’s effectively transitioning to a cloud-centric business model involving virtual machines and cloud-based workload.
Management expects $3 billion in annual recurring revenue by fiscal 2025. This turns out to be an impressive 30 percent compound annual growth rate against the backdrop of the $1 billion in annual recurring revenue reported by the company in 2021.
Fortinet Inc. has built a solid reputation for security-driven networking for a hyperconnected world. This helps secure industrial behemoths and governments using fraud-tight and intelligent protection across the expanding attack surface.
The capability of Fortinet’s security solutions to anticipate and quell cyber threats is a most desirable feature. The Fortinet Security Fabric architecture for delivering top-caliber security effectively curtails the most malicious methods of cybercriminals efficiently.
Also, as a legacy security software company like Palo Alto Networks, Fortinet is one of the world’s largest cybersecurity operations by revenue. There’s also double-digit growth and high profitability – a real cash machine.
However, Fortinet differs from Palo Alto Networks by investing in the organic development of cloud security instead of depending on acquisitions. This could end up being a masterstroke of true strategy. For example, one of Europe’s leading telecom providers, Telefónica Tech, is already deploying one of Fortinet’s new software-based internet security offerings.
The company is still heavily invested in firewalls, with its hardware generating more revenue as organizations turn to Fortinet when building data centers and servers.
If you want a good blend of sales and profitability growth, Fortinet is probably your best-bet security stock.
It’s no longer news that Alphabet, the parent company of Google, has acquired Mandiant for an all-cash deal of $5.4 billion ($23 per share).
Formerly known as FireEye Inc., Madinat provides dynamic cyber defense and response military-grade cybersecurity solutions. The company’s controls-agnostic solutions are available through the software-as-a-service, the Mandiant Advantage cloud platform. Other products from Mandiant include: On-Demand and Managed Service-as-a-Service Solutions and Professional Services, Security Validation and Security Operations Management Solutions, Threat Detection and Prevention Solutions, Threat Intelligence Solutions.
Mandiant uses a combination of machine, adversary breach intelligence, and operational cyber threat intelligence for its platform. It supports security teams in understanding and protecting against relevant threats their organizations face. Of course, it also enables them to develop suitable and robust cybersecurity programs to prevent and deal with cyber threats.
Revenue estimates for Mandiant stock remain strong and positive, as the company expects to do $562.16 million in 2023.
While global IT spending declined in the pandemic, cybersecurity spending picked up steam. In addition, new workplace threats have called for new approaches to cybersecurity. A net positive impact on the value of cybersecurity companies provides a new wave of opportunities to invest for a good profit in cloud-based cybersecurity companies.
Crowdstrike, Fortinet, Mandiant, and Palo Alto Networks, are four companies setting the pace in the modern security era. While you may not work at these companies, you stand every chance to build good fortune by investing in them.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only