3 Up-and-Coming Cybersecurity Stocks to Put on Your Must-Buy List
Cybersecurity stocks are increasingly becoming popular as the digital world has allowed people to receive information faster, store documents more efficiently, and communicate with people worldwide. These are significant benefits of the digital age, but new dangers have also emerged from this innovative path.
Cyberattacks are a growing threat that has already received widespread attention. Corporations get their data hacked, resulting in the information of millions of customers getting leaked. Key documents and company assets can also get leaked during hacks.
Data leaks aren’t the only risk. Some cyberattacks deplete people’s savings accounts, delete websites, and force business owners to start from scratch. None of those scenarios are desirable, so cybersecurity solutions are gaining momentum.
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According to Fortune Business Insights, the cybersecurity industry is projected to achieve a 13.8% compounded annual growth rate from now until 2030. That growth rate spells good news for cybersecurity stocks. Investors who want exposure to the industry may want to consider these promising picks.
Cybersecurity Stocks: Crowdstrike (CRWD)
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Crowdstrike (NASDAQ:CRWD) helps businesses detect threats and stop breaches. The company’s FY2023 financial results revealed that the company serves 23,019 subscription customers.
That number is from January 31, 2023; the most recent earnings report indicates more developments. In the first quarter of fiscal 2024, the company reported 42% year-over-year growth in annual recurring revenue. The company did not post the number of subscription customers in this press release, but a higher ARR indicates more customers and pricing power.
Revenue also increased by 42% year-over-year from $487.8 million to $692.6 million. One of Crowdstrike’s weaknesses has been net losses, but the company changed course and reported a $0.5 million net profit. It’s not much, but it is a step in the right direction. If Crowdstrike maintains profitability, its profit margins can grow quickly. That’s why I believe it is one of the top cybersecurity stocks right now.
Crowdstrike believes it can reach $3 billion in annual revenue for FY2024. If the company achieves that, it would represent a 34.8% year-over-year increase.
Qualys (QLYS)
Source: Michael Vi / Shutterstock.com
Qualys (NASDAQ:QLYS) is a small cybersecurity company with a $5 billion market cap and a 46 P/E ratio. The firm specializes in cloud-based security and has over 10,000 customers in 130 countries. Many Fortune Global 100 and Fortune 100 companies use Qualys’ services.
The cybersecurity firm reported 14% year-over-year revenue growth in the second quarter. Net income increased by 33% year-over-year in the same quarter, reaching $35.4 million.
Qualys continues to project double-digit revenue growth and calls for a 12%-13% year-over-year revenue increase in the third quarter. Revenue growth for the full year is projected to stay steady at 13% year-over-year. The firm also significantly raised its full-year GAAP EPS forecast from $2.58-$2.73 to $3.07-$3.22. The higher profits can fuel a lower P/E ratio and support future investments.
Qualys has partnerships with top companies in the industry. It integrates seamlessly with AWS, Azure, and the Google Cloud Platform.
Zscaler (ZS)
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Zscaler (NASDAQ:ZS) is a high-growth cybersecurity stock that has gained 27% year-to-date and 228% over the past five years. The Zero Trust Exchange securely connects individual users, devices, and applications.
Zscaler has over 6,000 customers, including over 30% of the Fortune Global 2000 Companies. This customer base helped Zscaler produce a 46% year-over-year revenue increase in the third quarter of Fiscal 2023.
While the company still has GAAP net losses, those losses have decreased considerably. At the same time last year, Zscaler reported a $101.4 million GAAP net loss. The firm only reported a $46.0 million GAAP net loss this quarter.
Zscaler has high scalability on its side. This scalability helped the company deliver strong year-over-year revenue growth while minimizing net losses. The company can become a promising investment if it becomes profitable like Crowdstrike and sees its profit margins expand over time. Thus, it is one of my top picks among cybersecurity stocks.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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