At the start of August, cybersecurity company Fortinet (NASDAQ:FTNT) issued financial results that missed Wall Street’s revenue expectations. Worse, the company lowered its forward guidance. This sent FTNT stock down 25% in a single trading session, its worst single-day price drop ever. The demise of Fortinet has cast a cloud over the entire cybersecurity sector, dragging the share prices lower than the company’s competitors as a result. In recent weeks, some cybersecurity stocks have fallen 10% or more.
Many analysts have spent the better part of August lowering their ratings and price targets on leading cybersecurity names. The broader stock market has been slumping during August. This has only worsened the situation regarding cybersecurity companies and their share prices. If there’s a silver lining in all of this, it is that many cybersecurity stocks now look to be attractively valued and present good entry points for investors. Here are three very oversold cybersecurity stocks to buy right now.
Palo Alto Networks (PANW)
Shares of Palo Alto Networks (NASDAQ:PANW) were way oversold heading into the company’s second-quarter financial results. The stock declined 16% leading up to the earnings report as investors worried that the company’s decision to announce financial results after the close of markets signaled problems ahead. The worry is the notion that companies with bad news often bury their results after the close of trading on a Friday. However, Palo Alto Networks surprised to the upside and its share price jumped 15% higher as a result.
The leading cybersecurity company issued financial results that blew away Wall Street expectations. Palo Alto Networks announced fiscal fourth quarter earnings per share (EPS) of $1.44 versus $1.28 that had been expected by analysts. Revenue in the quarter ended July 31 amounted to $1.95 billion versus $1.96 billion that was anticipated. Revenue increased 26% from $1.6 billion a year earlier. Prior to the Q2 print, PANW stock had risen 24% over the last 12 months. This is a great cybersecurity investment opportunity.
BlackBerry (BB)
For a truly beaten down cybersecurity stock that appears to have been left for dead by investors, look to BlackBerry (NYSE:BB). The former smartphone maker has pivoted to focus on cybersecurity. The company has seen its stock decline nearly 30% throughout the last 12 months and collapse 58% through five years. At around $4 a share, BlackBerry is now trading in penny stock territory. Investors looking for a bargain among cybersecurity stocks can certainly find it in BlackBerry, which is very oversold right now.
On a positive note, BlackBerry’s financial situation has been showing signs of improvement. At the end of June, the company reported a net loss of $11 million. That was a huge improvement from a net loss of $181 million a year earlier. Revenue for the quarter ended May 31 totaled $373 million, up 122% from $168 million a year earlier. Revenue in the company’s cybersecurity unit was $93 million in fiscal Q1, down from $113 million a year ago. However, the company sees cybersecurity sales accelerating in the months ahead, which is positive.
CrowdStrike Holdings (CRWD)
CrowdStrike Holdings (NASDAQ:CRWD) is, by many accounts, the market leader among cybersecurity companies. CrowdStrike is also a leader when it comes to employing artificial intelligence (AI) to improve cyber protections for corporations large and small. Yet despite its credentials, CRWD stock has struggled throughout the last year, falling 17% in the past 12 months. The stock is now trading 25% below its 52-week high. Investors should see this as a buy-the-dip opportunity and keep in mind that CRWD stock is still up 140% since its 2019 IPO.
The main issue dragging CRWD stock lower is concern about the company’s growth rate. While it is true that CrowdStrike’s revenue growth decelerated in its most recent quarter, the company’s revenue of $692 million was still 42% higher than a year earlier. Most companies (and investors) would kill for that type of revenue growth. While CrowdStrike’s growth may have cooled somewhat, this is still a company that is very much in rapid growth mode, making it a top cybersecurity stock to buy now.
On the date of publication, Joel Baglole 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.
