The novel coronavirus outbreak has caused many companies to require employees to work from home rather than an office but implementing the change has opened the door to security attacks, IT problems, and new cybersecurity challenges.
These workplace changes have spurred strong demand for cybersecurity products, particularly those that help to support remote workers. Examples of new ways of working from home include cloud computing, videoconferencing and virtual private networks.
To profit from these developments, here are the 10 best cybersecurity stocks to buy now.
10 Best Cybersecurity Stocks to Buy: Palo Alto Networks
Palo Alto Networks (NYSE: PANW), headquartered in Santa Clara, California, provides next-generation firewalls, critical components in the cutting-edge zero trust security model, as well as cybersecurity intelligence to enterprise customers.
The company’s stock price has seen a substantial recovery after dropping precipitously in early March from $249 to $133. Since then, the stock price has increased to close to $240. Based on strong fundamentals, the stock price is undervalued and should continue to climb over the next few months.
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On May 21, Palo Alto Networks posted strong fiscal third-quarter revenue growth of 20 percent year over year, reaching $869.4 million. The company reported non-GAAP earnings per share of $1.17, compared with $1.31 for the fiscal third quarter of 2019. The company saw billings increase 24 percent year over year to top $1 billion.
PANW has acquired more than a dozen security startups over the last few years to beef up its enterprise cybersecurity capabilities. Its most recent acquisition was CloudGenix, a cloud-delivered SD-WAN provider, for $420 million.
“Palo Alto (PANW) reported earnings last week, and indicated that working at home will be a tailwind for next 12 to 18 months,” observed Hilary Kramer, host of a national radio program called “Millionaire Maker” and head of the Value Authority and GameChangers advisory services. “Palo Alto did well immediately after the report, but then fell back with the rest of tech. This seems to indicate the stock and the entire group may need a breather. “
10 Best Cybersecurity Stocks to Buy: FireEye
FireEye (NASDAQ: FEYE), based in Milpitas, California, provides enterprise security products, as well as breach investigative services and cyberthreat intelligence through its Mandiant subsidiary.
For the first quarter of 2020, FireEye reported revenue of $225 million, a 7 percent year-over-year increase. It posted a net loss of 2 cents per share, a slight improvement from a net loss of 3 cents per share in the year-ago quarter. Billings totaled $170 million, a 7 percent year-over-year drop.
The company’s stock price dipped from a high of $18.16 in January to a low of $8.11 in March. It has slowly climbed to around $12 per share since then.
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FireEye has struggled because its high-cost security product could not find mass market acceptance, observed Kramer. At the same time, it should see a bump from the increased demand for cloud security in the aftermath of the COVID-19-inspired work from home movement, as well as the spike in ransomware attacks and data breaches tied to the pandemic.
Eight of 15 analysts who cover FireEye give the stock a “buy” or better recommendation.
10 Best Cybersecurity Stocks to Buy: Proofpoint
Proofpoint (NASDAQ: PFPT), based in Sunnyvale, California, offers cloud-based security products for email, social media and mobile devices.
For the first quarter of 2020, Proofpoint reported total revenue of $249.8 million, a 23 percent year-over-year jump. Billings totaled $238 million, an increase of 11 percent compared to the same quarter last year. The company posted non-GAAP earnings per share of 38 cents in the quarter.
Like many other tech companies, Proofpoint’s share price has been on a roller-coaster ride this year, dropping from above $128 per share in February to $91 in mid-March, rallying to $132.4 in early May, then dropping to its current $114. The average target price for Proofpoint’s stock is $141.38 for the next 12 months, based on forecasts by 17 analysts.
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10 Best Cybersecurity Stocks to Buy: Fortinet
Fortinet (NASDAQ: FTNT), also based in Sunnyvale, California, provides firewalls, antivirus, intrusion prevention and endpoint security that help secure in-house and remote workers.
Fortinet reported first-quarter 2020 revenue of $577 million, a 22 percent jump year over year. Billings jumped 21 percent year over year, reaching $667.8 million. Earnings per share increased 30 percent to 60 cents per share.
The company beat expectations on revenue, billings and earnings per share, according to William Blair analyst Jonathan Ho.
“Increased work from home activity drove demand for its FortiGate, FortiClient, FortiToken, and FortiAuthentication solutions,” Ho observed.
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10 Best Cybersecurity Stocks to Buy: Zscaler
Zscaler (NASDAQ: ZS), a San Jose, California-based cloud security company, provides web security, firewalls, sandboxing, antivirus, and vulnerability management to enterprises. The company recently acquired Edgewise Network, which secures application-to-application communications for public clouds and data centers.
The company reported healthy revenue growth of 40 percent year over year, reaching $110.5 million in its fiscal third quarter, which ended April 30. Billings increased 55 percent year over year to $131.3 million. Non-GAAP earnings per share were 7 cents per share, compared to 5 cents per share in the same quarter last year.
Zscaler’s stock price dropped to a low this year of $39.50 in mid-March, but rebounded strongly, reaching a year-to-date high of $77.06 on May 20. The consensus of 23 investment analysts is that the stock is a buy.
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“Zscaler is the current glamour company” in the cybersecurity group, Kramer said.
10 Best Cybersecurity Stocks to Buy: Okta
Okta (NASDAQ: OKTA), headquartered in San Francisco, provides cloud-based identity and access management services to enterprises.
The company reported strong revenue growth of 46 percent year over year, reaching $182.9 million in the first quarter ended April 30. Billings grew 42 percent year over year, reaching $209.5 million. Non-GAAP net loss per share was 7 cents, compared to 19 cents in the same quarter last year.
The company’s stock price has risen this year from a low of $96 in mid-March to near $184 currently. Based on a review of 18 Wall Street analysts, 12 have a buy recommendation for Okta.
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10 Best Cybersecurity Stocks to Buy: Qualys
Qualys (NASDAQ: QLYS), headquartered in Foster City, California, provides cloud security, vulnerability management, detection and response, and related services to enterprises.
The company posted modest revenue growth of 14.5 percent year over year, reaching $86.3 million in the first quarter ended March 31. Non-GAAP earnings per share were 65 cents, compared to 49 cents in the year-ago quarter.
Qualys’s stock price bottomed out at $68 in March, then climbed to a year-to-date high of $117.32 on May 26, before sliding a bit. Out of 17 Wall Street analysts, five have a buy recommendation on Qualys.
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10 Best Cybersecurity Stocks to Buy: Rapid7
Boston-based Rapid7 (NASDAQ: RPD) provides security analytics and automation to enterprises. To boost its cloud security bona fides, the company recently agreed to acquire DivvyCloud for $145 million.
Rapid7 reported revenue of $94.3 million in the first quarter, a 29 percent increase from the same quarter last year. It posed a non-GAAP net loss per share of 9 cents, compared to net earnings of 2 cents in the same quarter the previous year.
The company’s stock price rebounded from a March low of $33.40 but has not reached levels seen earlier in the year, indicating the stock is undervalued. This judgment is supported by a buy recommendation from 14 out of 16 analysts.
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10 Best Cybersecurity Stocks to Buy: Ping Identity
Denver-based Ping Identity (NYSE: PING) provides identity and access management services to enterprises.
The company posted revenue of $61.4 million in the first quarter, up 22 percent year over year. It reported earnings per share of 3 cents.
After dropping to around $16 per share in March, Ping’s stock price has gradually returned to a $26 to $27 per share range. Twelve out of 14 analysts issued a buy recommendation for the stock.
Chart Courtesy of www.StockCharts.com
10 Best Cybersecurity Stocks to Buy: Mimecast
London-based Mimecast (NASDAQ: MIME) provides cloud-based email management, security and archiving for Microsoft Exchange and Office 365.
For the fourth quarter of its fiscal year 2020 ended March 31, Mimecast reported revenue of $114.2 million, 24 percent year over year growth and non-GAAP earnings per share of 15 cents, compared to 7 cents per share in the same quarter last year.
The company’s stock price rebounded from a low of $27.55 in March to over $40 currently. Of 18 Wall Street analysts who cover the company, 14 issued a buy recommendation.
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While the COVID-19 pandemic and the economic shutdown have devastated segments of the U.S. economy, cybersecurity vendors have benefited from the rapid shift to remote working by most U.S. companies. As the United States gets back to business, many remote workers likely will remain at home, fueling the continued need for strong enterprise cybersecurity.
Fred Donovan is a special writer for www.stockinvestor.com and has followed the cybersecurity industry for many years.
