雅虎香港財經 The 7 Best Cybersecurity Stocks to Buy in June 2024
Cybersecurity stocks are great long-term buys because we’re still not prepared for cyber attacks, even after hundreds of incidents over the years. According to Cybersecurity Ventures, it’s estimated that global cybercrime damage costs will reach $10.5 trillion annually by 2025, up from $3 trillion USD in 2015. This backdrop has led to my list of the best cybersecurity stocks to buy.
Shockingly, 65% of small to medium businesses don’t think they’re cyberattack targets, and even government agencies like the U.S. Marshals Service have fallen victim to ransomware attacks. Despite a recent setback for Fortinet (NASDAQ:FTNT), cybersecurity remains a secular growth market for the next five years.
Companies that ignore their security infrastructure are suffering at the hands of rogue hackers, as seen in attacks on Las Vegas casinos and Clorox (NYSE:CLX). The global cost of cybercrime exceeded $8 trillion last year and could surpass $11 trillion by the end of 2023, with ransomware being 57 times more destructive in 2021 than in 2015.
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So with this thesis in mind, here are seven of the best cybersecurity stocks for investors to buy this year.
Cloudflare (NET)
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Cloudflare (NYSE:NET) operates a cloud platform offering network services globally.
NET has been quietly integrating many of its services into the internet’s fabric, serving millions of users through offerings such as its DNS service, Cloudflare WARP, and reverse proxy for website owners. Impressively, around 30% of the 10,000 most popular websites globally use Cloudflare, and many of NET’s services are accessible free of charge.
The company is following a classic tech stock strategy of prioritizing the expansion of its user base, influence, and reach over immediate profit.
For 2024, Cloudflare forecasts revenue between $1.648 billion and $1.652 billion, representing a growth of 22%-24% year-over-year (YOY). The company aims to achieve non-GAAP operating income between $130 million and $140 million. Key growth drivers include the expansion of its serverless computing platform and continued enhancements in security features.
One of the best things about NET is that its quarterly revenue growth YOY is 30.5%. The analyst target price is $90.33, with a price-to-sales ratio of 24.41x. This means that it’s relatively inexpensive relative to its long-term potential.
Fortinet (FTNT)
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Fortinet (NASDAQ:FTNT) is one of those cybersecurity stocks that investors should consider. Although FTNT’s market cap of around $54 billion at the time of writing is arguably pricey, the company’s outlook over the short term looks attractive.
FTNT stock is expected to grow by approximately 12.85% in terms of revenue and 11.11% in terms of EPS in 2024. The company has projected revenue for the first quarter of 2024 in the range of $1.30 billion to $1.36 billion, with billings in the range of $1.39 billion to $1.45 billion.
The company is expecting a shift in the cybersecurity industry which is central to its strategy. Fortinet, citing Gartner, notes that 75% of organizations pursued vendor consolidation in 2022, highlighting the industry’s shift towards fewer, more dominant players in the industry.
FTNT appears to be undervalued based on its strong financial performance and growth potential. Despite having a high trailing price-to-earnings (P/E) ratio of 38.8x and a forward P/E ratio of 39.06x, the company’s quarterly earnings growth YOY is impressive at 25.8%, and its quarterly revenue growth YOY is solid at 7.2%. Moreover, Fortinet’s operating margin TTM of 23.6% and profit margin of 22.2% indicate a healthy and profitable business.
Zscaler (ZS)
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Zscaler (NASDAQ:ZS) is an attractive cybersecurity stock that currently serves a large number of Fortune 500 and Fortune 1000 companies.
Despite its slightly lower market cap of $27 billion compared to some other cybersecurity stocks, ZS has demonstrated impressive financial performance and outlook.
One of Zscaler’s key strengths is its Zero Trust Exchange platform, which connects users directly to apps and eliminates traditional security vulnerabilities. This innovative approach to cybersecurity could be crucial in preventing account takeovers and securing sensitive data for enterprises.
The company’s strong quarterly revenue growth YOY of 32.1% indicates a rapidly expanding business, which is crucial for a technology company in the growing cybersecurity industry. Analysts also have a positive outlook on the stock, with a majority rating it as a “buy” or “strong buy,” and an average target price of $236.14, which is considerably higher than its current trading price.
Rapid7 (RPD)
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Rapid7 (NASDAQ:RPD) specializes in vulnerability management, detection, and response solutions.
It’s a buy due to its strong quarterly revenue growth YOY of 12%, positive operating margin TTM of 5.06%, and EBITDA of $52.858 million, indicating positive cash flow. The company is well-positioned to benefit from the growing demand for cybersecurity.
Furthemore, despite Rapid7’s Annual Recurring Revenue (ARR) falling short of expectations and a downward revision of its full-year 2024 ARR forecast, the company surpassed operating margin expectations and reiterated its full-year operating income and free cash flow guidance.
UBS noted that the current market valuation of Rapid7, with shares trading at approximately 3.1 times the calendar year 2025 enterprise value to sales, suggests that much of the negative sentiment may already be reflected in the stock price. Now could be a good time for investors to scoop up shares.
Tenable (TENB)
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Tenable (NASDAQ:TENB) is known for its Nessus vulnerability scanner, which is widely used in the industry. The company focuses on securing operational technology.
TENB found its way on this list as it presents a compelling buy case due to its strong quarterly revenue growth year-over-year of 14.4%, positioning in the rapidly growing cybersecurity industry, and positive analyst sentiment, with 16 out of 19 analysts rating the stock as a “buy” or “strong buy” and an average target price of $58.50, suggesting significant upside potential from its current price.
TENB has done well recently. It surpassed analysts’ expectations on both earnings per share and revenue fronts. The company reported earnings per share of 25 cents, which was significantly higher than the analyst estimate of 18 cents.
In terms of revenue, Tenable Holdings also exceeded analysts’ projections, posting a figure of $215.96 million for the quarter. This outperformed the analyst estimate of $213.57 million.
CyberArk (CYBR)
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CyberArk (NASDAQ:CYBR) specializes in identity security, specifically in managing privileged access and preventing cyberattacks. The company reported a 406% increase in EPS and a 32% YOY revenue growth in Q4.
The company has a niche in privileged account access and has recently earned FedRAMP High authorization for two of its SaaS offerings, reinforcing its ability to secure access to corporate applications.
Despite a slight dip in quarterly earnings growth, the company’s revenue per share TTM of $19.34 and gross profit TTM of $465.66 million indicate a healthy financial position. With a market capitalization of over $10 billion and a high price-to-sales ratio TTM of 13.98x, investors have shown confidence in CYBR’s growth potential.
Additionally, with the company’s strong analyst ratings, 30 out of 31 analysts rating the stock as a “buy” or “strong buy,” and an average target price of $297.90, it has a bright future ahead of it.
Varonis Systems (VRNS)
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Varonis Systems (NASDAQ:VRNS) offers data security and analytics solutions, focusing on protecting sensitive data from insider threats and cyberattacks.
VRNS reported 6.2% YOY revenue growth in the latest quarter, with a revenue per share TTM of $4.62 and gross profit TTM of $403.8 million. The company has a market capitalization of $4.8 billion and a price-to-sales ratio of 9.73x. Analysts have a generally favorable view of the company, with 12 out of 21 analysts rating the stock as a “buy” or “strong buy,” and I think that the market isn’t fully appreciating its potential.
Further, looking forward to 2024, Varonis expects to achieve ARR between $617 million and $625 million, reflecting a 14% to 15% YOY growth. The company projects revenues of $536 million to $546 million for the year, with a free cash flow of $70 million to $75 million.
Thus, it’s one of those strong mid- to small-cap cybersecurity stocks that investors should have on their radars.
On the date of publication, Matthew Farley 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.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.
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