3 Cybersecurity Stocks to Benefit from Growing Threats
According to the University of San Diego, “A host of new and evolving cybersecurity threats has the information security industry on high alert.” Hackers are carrying out these attacks using phishing, machine learning, malware and artificial intelligence. These attacks can halt a company’s business entirely for significant periods of time, and the overall cost of cyber attacks is projected to reach an annual total of $10 trillion in 2025. What’s more, firms are suffering from a shortage of skilled information security professionals. Given all of these points, I believe that many cybersecurity stocks will thrive over the longer term. Here are three top cybersecurity stocks to buy.
CyberArk (CYBR)
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Israel-based CyberArk’s (NASDAQ:CYBR) provides protection against increasingly prevalent, weaponized AI attacks while simultaneously using the same technology to bolster the defenses that it provides.
These attributes appear to be helping the company grow rapidly, as its revenue climbed 25% last quarter versus the same period a year earlier to a record $191 million. Moreover, for all of 2023, the firm predicts that its operating income, excluding certain items, will come in at a significant $17.7 million to $21.7 million.
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In a note to investors following the unveiling of the firm’s Q3 results, investment bank Wedbush stated that the company reported “robust” earnings, while the demand for its products stayed resilient.
The bank increased its price target on the shares to $200 from $185 and kept an “outperform” rating on CYBR stock.
Check Point (CHKP)
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Another Israel-based IT security company that extensively uses AI, Check Point (NASDAQ:CHKP) is not growing nearly as quickly as CyberArk, but its bottom line is climbing significantly, and its valuation is very attractive. Moreover, President Rupal Shah Hollenbeck said he expects the firm to deliver great results in 2024.
In Q3, CHKP’s sales rose only 3% year-over-year to $596 million, but its earnings per share climbed 19% year-over-year to $1.75.
On the company’s Q3 earnings call, CEO Gil Shwed explained that the company’s acquisition of a firm called Perimeter 81 would enable it to provide more secure, much faster and more unified security solutions for enterprises’ remote users. Given the proliferation of remote workers, I believe that the acquisition could meaningfully improve CHKP’s financial results in 2024.
CHKP has a very attractive forward price-earnings ratio of 16.
Qualys (QLYS)
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Qualys (NASDAQ:QLYS) specializes in securing cloud applications. Given the ongoing growth of the cloud, combined with increases in the size and scope of cybersecurity threats, Qualys is well-positioned to succeed over the long term.
Moreover, the company is growing rather quickly these days, as its revenue climbed 13% in Q3 versus the same period a year earlier and its operating income soared 31% year-over-year to $33.3 million.
QLYS stock has risen 25% in the last three months and 70% in 2023, showing that the Street is becoming enamored with the name.
Also making QLYS one of the most attractive cybersecurity stocks is the fact that its shares have a reasonable forward price-earnings ratio of 37.5.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.
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