While many of the best cybersecurity stocks suffered amid the 2022 bear market, we’re seeing a big rebound in this group now. Part of that is due to the current big rally within the Nasdaq and tech stocks. However, a major contributing factor has to be growth.
I don’t just mean “growth” in the typical sense — i.e. growth stocks.
Instead, I mean that these firms have robust demand for their products. That demand continued throughout the 2022 bear market and despite any worries about a potential recession. Why?
Because regardless of the economic climate — good, bad or ugly — companies have to protect their assets. Whether that’s intellectual property, proprietary information, consumer and/or customer data, and a whole host of other potential liabilities.
Because cybersecurity has become such an important component to these companies, they continue to shell out good money for strong protection. Let’s take a look at the top cybersecurity stocks right now.
Best Cybersecurity Stocks: Palo Alto Networks (PANW)
Palo Alto Networks (NASDAQ:PANW) has become the big name when referring to the best cybersecurity stocks. This company experienced steady yet strong growth through the 2022 bear market and continues to churn out steady growth today.
Analysts expect 25% revenue growth this year and roughly 22% growth in 2024. That’s alongside earnings growth of almost 70% this year and anticipated further growth in 2024. When the firm last reported earnings in May, its outlook was strong — again.
A year ago, management said, “we’re not seeing the pressure from an inflation or reduced economic activity perspective.” That alone showed that the better question was “when” not “if” Palo Alto stock would rebound to new highs.
Shares of Palo Alto Networks recently fell on Wednesday July 12, following a cybersecurity offering from Microsoft (NASDAQ:MSFT). The stock fell 7% on heavy volume, but is working to recover those losses as investors buy the dip. Even though the stock recently notched all-time highs, investors are eager to scoop up the stock on pullbacks (and management says Microsoft has a “long way to go” still).
A Looming Breakout?: CyberArk (CYBR)
CyberArk (NASDAQ:CYBR) is easily the smallest name on this list. It weighs in with a market capitalization of $6.75 billion, significantly below that of Palo Alto, which commands a value more than 10 times larger at $74 billion.
That said, both names emphasize why investors shouldn’t sleep on this group. Palo Alto recently notched all-time highs, while CyberArk stock is flirting with a major breakout. Maybe it won’t come to fruition, but the potential for a large upside move is there.
Current estimates call for 23.5% revenue growth this year and next year, with 2025 being the year that analysts expect the company to top $1 billion in revenue. While the firm is not yet profitable on a GAAP basis, its non-GAAP earnings growth is robust. Consensus expectations call for 165% growth this year and more than 330% growth in 2024!
With its smaller market cap, CyberArk offers investors excellent long-term potential.
High Valuation, High Reward Cybersecurity: CrowdStrike (CRWD)
Considered one of the higher valuation names in the group — which is often the case with even the best cybersecurity stocks — CrowdStrike (NASDAQ:CRWD) shouldn’t be left off the list.
The company continues to generate substantial growth amid a robust cybersecurity environment. Consensus estimates call for 35% revenue growth to just over $3 billion this year. Next year, estimates call for almost 30% growth. Bottom-line expectations are also impressive, calling for 55% and 29% growth this year and next year, respectively.
Last quarter, shares dipped 11% the day after CrowdStrike reported earnings. The 11% loss turned into a loss of just 1.6% that day, as investors bought the dip. They did so for good reason too, as the firm turned in a top- and bottom-line beat for its fiscal first quarter, while delivering upbeat guidance for Q2 and the full year.
President and CEO George Kurtz noted that, “CrowdStrike’s first quarter results exceeded our guided metrics and reached new financial milestones, delivering the winning combination of growth, profitability and free cash flow at scale.”
That’s exactly what investors are looking for in the best cybersecurity stocks.
On the date of publication, Bret Kenwell 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.
