The 7 Hottest Cybersecurity Stocks to Own for 2023 and Beyond

The recent sell-off comes as investors book profits on remote working and SaaS stocks that rallied big through the pandemic. However, this could present a good opportunity for investors to enter the cybersecurity space. Global IT spending is expected to pick up this year after a muted 2020, rising by about 8.4% to $4.1 trillion per Gartner IT . Cybersecurity is likely to be a major focus area for most companies given the increasing shift to distributed workplaces and cloud-based applications and some high-profile security breaches in recent months. Within our theme, Fortinet, a company that provides cybersecurity-related hardware and software, has been the strongest performer, rising by about 34% year-to-date driven by stronger than expected earnings. Our indicative theme of Cybersecurity Stocks has returned over 150% since the end of 2019, compared to gains of about 21% on the S&P 500 over the same period.

Right now, Fortinet’s leading product is their software-defined wide area network. These products have been particularly crucial as companies have been working from home. The latest iteration of the Falcon includes cloud protection, which is so essential for today’s devices.

Cybersecurity Stocks: Private Equity Firms

That alone is a good reason for investors to look at some of the hottest cybersecurity stocks on the market. It offers a portfolio of products and services for enterprises as well as government entities. Its security ecosystem includes cloud security platform, Prisma, and artificial intelligence -powered threat detection platform, Cortex.

The company develops and sells a whole range of different cybersecurity products and services. This includes firewalls, anti-virus protection, endpoint security components and much more. The Global X Cybersecurity ETF provides investors with a reliable source of exposure to 27 cybersecurity stocks, making it a highly concentrated fund. Furthermore, software companies represent 57% of the fund’s top holdings, which tend to be more valuable than traditional hardware companies. Moreover, with an expense ratio of just 0.50%, investors gain maximum value from this powerful ETF. Now, I want to be clear that OKTA may be one of the best cybersecurity stocks to buy for speculation.

Moving to the income statement, Qualys enjoys outstanding profitability ratios. For example, its net margin is 22.5%, beating out the sector median of 2.3%. Qualys is especially vital for organizations that utilize hybrid IT networks, whether that be on-premises, endpoints, cloud computing, mobile or other interfaces. The company identifies all known and unknown assets in these networks, providing comprehensive security against myriad cyberthreats.

Down 25%, it trades below its three-year average price-to-free-cash-flow and price-to-sales (P/S) ratios. We don’t know when the market will turn bullish again, but when it does, Palo Alto has the makings of a long-term winner. Global cybersecurity revenue is expected to grow 65% in the next five years as a result. Savvy investors have plenty to gain from adding cybersecurity to their portfolios. With employees in many industries working through the cloud, companies are looking for new solutions to keep their networks safe. The stock is currently very affordable, and their strong performance indicates great potential for future growth.

Cybersecurity is a long-term investment

Additionally, the Cyber security stocks is down substantially and trading at a massive discount based on its tremendous outlook ahead. This was made possible by a successful adoption of its cloud offerings, with revenue continuing to grow into the fourth quarter, where it could exceed the $125 million mark, 4% higher than expectations. Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three prominent cybersecurity stocks—FireEye, Fortinet and Palo Alto Networks—based on their fundamentals.

NortonLifeLock is a consumer facing https://forex-world.net/ company that currently offers excellent value. As the need for identity security grows for both B2B and B2C businesses, Ping has plenty of opportunity for ongoing growth. Since Ping offers cloud based products, they’ve been able to adapt to the needs of companies that are working from home. Unlike many of the other companies on this list, CACI works with both domestic and international government agencies.

One of the most significant factors is the increase in cyber threats, as more and more business and personal activity move online. Cybercriminals are becoming more sophisticated and organized and are using various tactics to target individuals and organizations. This shift aims to enable them to remain relevant in an increasingly complex and dynamic security landscape.

Alphabet invests billions in cybersecurity

Those capabilities give FireEye an entrance into an organization before being able to cross-sell its security products. FireEye should continue to gain a foothold with its security platform for cloud, endpoint, network and email, alongside its important security services. According to ReportLinker, the global data recovery software market reached a valuation of $14.8 billion in 2021. Interestingly, against a basket of valuation gauges, QLYS is fairly valued.

• This could make companies and governments more serious about protecting their networks and digital infrastructure, translating into higher demand for the companies in our theme in the years to come.
• Moreover, regardless of threats from unscrupulous governments, data breaches have long been a sour spot since the advent of digitalization.
• However, the subscription business saw an 86% spike in revenue to $88.5 million.
• In addition, cloud security often requires compliance with industry regulations and standards, such as HIPAA, GDPR and PCI DSS.

This technology is more important than ever as employees are working from home on their personal devices. They specialize in endpoint security, which is highly sought after right now. This means that investors can get a good deal on this stock right now. Palo Alto is trading at a low level relative to the financial growth they have experienced this year. Growth has been steady, with their newer cloud offerings taking up an increased percentage of their total earnings. They are known for their advanced firewall technology, but are quickly expanding.

CACI International Inc (NYSE: CACI)

The company is well positioned in the rapidly growing software-defined wide area networking (SD-WAN) market. Since its firewalls have SD-WAN built in, analysts believe this can make Fortinet an easy choice to procure security and the latest networking trend together as organizations exit routing products. Fortinet’s growing relationship with large service providers sets it up to benefit from 5G rollouts requiring updated security and networking infrastructure. Vanguard, whose founder, Jack Bogle, invented the index fund in 1976, doesn’t have a specific ETF solely focused on cybersecurity. It is a broad-based index of the U.S. technology sector and is full of cybersecurity companies and other large businesses involved in security in some form.

Their firewalls now go beyond hardware as they’re building a cloud security platform. As our technologies develop, our cybersecurity tools are going to advance along with them. The cybersecurity market has seen a stunning growth rate over the past few years.

The company frequently assists government bodies and large corporations to investigate security breaches. Their move towards cloud technology has shown that they are committed to being adaptable. Palo Alto Networks has long been a major player in the cybersecurity space. Individuals and small businesses also need security to protect themselves against phishing scams and other password breaches.

Identity verification systems are coming under sustained attack through misuse of credentials, now a primary method that attackers use to access systems and achieve their goals. Gartner describes the collection of tools and processes needed to defend identity systems as „identity threat detection and response“ . In the longer term, more consolidated solutions for this risk may emerge.

For the most part, the growth prospects for cybersecurity stocks remain strong. Microsoft is certainly the „cheaper“ stock at 27 times earnings per share and 31 times FCF. Nevertheless, Fortinet is still growing, profitability is on the rise, and demand for cloud and other advanced-networking security is not going away anytime soon. This cybersecurity pure-play business still looks like a buy to me for 2023 and beyond. The stock has surged by 60% this year, as an increasingly distributed workforce drives demand for the company’s secure access solutions. For this article, we scanned different ETFs tracking cybersecurity stocks and picked the most notable cybersecurity stocks that outperformed the broader markets in 2022.

Moreover, multiple high-profile cyber attacks in recent months have also made companies prioritize their security spending. In an interview with BNN Bloomberg, Daniel Ives, chief strategy officer and head of technology research at GBH Insights, said that as companies move to Cloud, security remains the main focus of their attention. He said that Cloud security is becoming one of the biggest themes of the cybersecurity market. He also talked about the mergers and acquisitions activity taking place in the industry and talked about some notable companies, including Cisco, Zscaler and Qualys Inc. Investing in cybersecurity, the growth potential of the industry and the increasing importance of cybersecurity in our digital world make it a compelling investment opportunity for the future. Secondly, as more and more companies and organizations recognize the importance of protecting their digital assets, the need for advanced cybersecurity solutions is only expected to grow.

Palo Alto Networks is one of the most established cybersecurity companies on the market right now. Many companies have been relying on cloud based technology for their day-to-day operations. To meet this need, many B2C cybersecurity solutions have become prominent in recent years. Furthermore, the company reported that it had returned over $2 billion to its shareholders through share repurchases year-to-date. Moreover, recent trends have increased the firm’s clout and competitiveness within the industry, making now the perfect time for new investors to take advantage of this incredible investment opportunity. Thanks to its diversified business model and experienced management, the company boasts one of the top margin profiles in the sector, with double-digit sales and earnings expansion over the past several years.

Their product offering is one of the most diverse of any cybersecurity company. Crowdstrike stock currently has a high price tag relative to its revenue growth. Endpoint security products protect devices like computers and cell phones from cyber attacks.

However, a rough go for the stock market in 2022 and slowing revenue growth at SentinelOne has sent the stock below its IPO price. In addition, some security vendors are shifting to software-based subscription business models from selling hardware appliances. Palo Alto Networks is a multinational cybersecurity company that was founded in 2005. Last year revenues topped $3 billion as the company services 70,000 businesses in more than 150 countries.

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According to a Bloomberg report published in November, Ivana Delevska, chief investment officer at Spear Invest, said that security is usually the last area to see budget cuts in the enterprise sector. That’s why the analyst thinks the cybersecurity domain is expected to keep growing despite recession fears. Based on your research and analysis, you can determine your investment strategy, including the amount you want to invest and the specific cybersecurity stocks you wish to purchase. Consider diversifying your portfolio by investing in multiple cybersecurity companies or through cybersecurity ETFs or mutual funds. With this context in mind, let’s analyze the 15 best cybersecurity stocks to buy now. We took into account hedge fund sentiment, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.

The company is expected to generate $176 million in revenue for its full fiscal year 2022. However, as the company spends heavily to increase its market share, investors could be waiting a while for the company to turn profits. SentinelOne is one of the more recent pure-play cybersecurity companies to go public. Its initial public offering in June raised $1.2 billion in cash and valued the company at $10 billion, making it one of the largest IPOs ever for a cybersecurity name. The cybersecurity group released second-quarter results in early August.

Currently, 60% of knowledge workers are remote, and at least 18% will not return to the office, Gartner research said. Corporate security managers are urged to look beyond traditional approaches to security monitoring, detection, and response to manage these wider risks. CDNs are internet infrastructure that maintain the internet “freeway” on which data travels. Akamai is a leader in this sector and is also a developer of edge computing technology, which pulls data away from centralized data centers and closer to end users.

With almost $5.6 billion in assets under management, the First Trust NASDAQ Cybersecurity ETF is by far the largest pure-play ETF in this part of the technology sector. First Trust is a large financial services firm offering a variety of investment products, and its cybersecurity offering is one of the longest-tenured in the ETF world. Its inception date was back in 2015, and shares of the fund have more than doubled since then.