Top 5 Cyber Security Stocks to Buy This Month
Updated: Nov 14, 2019
In September 2017, credit reporting company Equifax reported a massive breach which led to millions of Americans’ data being compromised. While the data has never surfaced on any dark web platform or other areas of public domain, the breach exposed users’ social security numbers and other extremely personal details. Few weeks ago, the firm was ordered by the court to pay $700 million in fines and compensation for the same.
Equifax is one of the biggest cases of cybersecurity breaches in recent history. The impact of the breach is huge and has shocked many more companies, even governments, to wake up to the idea of extensive cybersecurity practices. As investors, this presents a goldmine of opportunities to capitalize on. Here are the top 5 cybersecurity stocks to buy this month.
Cisco Systems Inc. isn’t a cybersecurity-focused company but a rather larger multinational corporation with a proven track record in IT product development. It dedicates a big part of its business to cybersecurity, and for those who are looking for a bigger and more diversified stock, Cisco could make the cut. At this price, Cisco is relatively cheap, and its share price shows upward momentum, because of which it could be a steady performer as well as a long-term growth driver in your portfolio.
The company was reportedly interested in buying cybersecurity startup Signal Science, which is a member of its Security Technical Alliance. Note that security is one of the top drivers of the company’s revenue, and Q3 2019 numbers went up by 21% due to this business. Cisco can add a balanced, well-known company to your portfolio that leads the security ecosystem.
Palo Alto Networks Inc. (NYSE:PANW)
Palo Alto Networks Inc. is one of the best-known companies in the cybersecurity business and makes it to the portfolios of people interested in this sector. The stock has gone up by 150% in the last five years, and the revenue growth has been steady at 20%. The company posted stronger than expected Q3 earnings.
SeekingAlpha suggests that increasing government and corporate spending on cybersecurity will help the industry, especially marquee companies like PANW, to make a stronger impact on the market. They have recently done some good work by acquiring some good cybersecurity companies focused on cloud computing that would help them reap the rewards. Its most important recent acquisitions were RedLock, Evident.io, and Demisto.
FireEye is a relatively low-priced stock. It is a prominent company in the cybersecurity space that has a slew of robust development projects under its belt. The revenue growth at FireEye is also reliable, but the company hasn’t been all-out profitable yet.
The stocks of the company are cyclical, which means that they could provide lucrative trading opportunities too. To top it all off, it also won the award for the Best Security Company of the Year at the Cyber Security Awards 2019. The company ended the last year on a strong note and currently serves more than half of Forbes Global 2000 in 103 countries.
SeekingAlpha notes that FireEye has been trading sideways for some months and hasn’t been able to capitalize on its growth prospects. Though the company’s revenues have kept on increasing over the years, its competitors have gained market share more aggressively. Overall, FEYE is a stock worth considering if you are looking for a steady performer on your portfolio.
It is not as big a stock as others listed above, but Proofpoint has a strong market presence in the defense and aerospace sector, which makes it a worthwhile contender for this list. The company also has extensive projects in the manufacturing, healthcare, finance, and education sectors. At press time, it was trading at $125.76 with a 1.73% upside. However, it’s market cap is relatively small.
The company, just like other promising startups in a different industry, has experienced rapid growth in a dynamic sector. The stock has been up by 200% in the last five years. Recently, security and managed infrastructure services supplier Lantech partnered with Proofpoint to use their technology against email-related threats.
Just like Proofpoint, CyberArk is also a small company with a market cap of over $5 billion. Despite its small size, the company has posted 34% year-on-year revenue growth and its stock has grown by over 100% in the last year. The stock is relatively stable as well, though it doesn’t share the high-growth features of its peers.
Currently, the stock has reached new highs as the company introduced CyberArk Alero to its privileged access management product line. The security features will also be available on its cloud platform, which will help in enhancing overall security at an organization and reduce the chances of a breach.
Why is cybersecurity important?
A recent report from CyberArk suggests that half of all organizations believe that infiltrators can get into their network every time they try. Despite the global increase in cybersecurity investments and a rising focus on agility and automation, organizations fail to feel secure about their data. The risk compounds even more with cloud computing, robotic process automation (RPA) and DevOps.
According to the report, about 78% of respondents classified hackers, organized crime, hacktivists, and privileged insiders as the top greatest threats in their respective organizations. They are also concerned with issues like phishing, ransomware, and Shadow IT.
In these times, the number of companies focusing on cybersecurity as a key investment in the business is growing, and some promising startups and established firms may be able to capitalize on the trend. As investors, you may see cybersecurity as a growing industry that is still lurking behind its potential. Investing early in up and coming companies with extensive security focus could be the key to a strong portfolio that stands the test of time.
Credit: BusinessInsider.com, The Wall Street Journal, CybersecurityFL, Capital.com, NYSE
© De Angelis & Associates 2019. All Rights Reserved.