An amalgamation of recent events highlights the critical importance of cybersecurity. Take, for example, the AT&T (NYSE:T) hack that occurred a few weeks ago. While just a single event, it has spurred a surge in demand for cybersecurity solutions, with potential for more such incidents to follow suit.
From a systematic perspective, cybersecurity is poised for steady growth. Projections indicate that the industry’s end market will witness an annual surge of 11.44% until 2029. Additionally, many cybersecurity platforms have transitioned out of beta stages, opening up new monetization opportunities for the industry.
Despite the allure of the cybersecurity sector, navigating the waters of picking winning stocks can be challenging due to their inherent volatility. To navigate this, a closer look at the industry’s key players is essential to identify top-performing assets.
With this in mind, here are three cybersecurity stocks worth keeping an eye on:
CrowdStrike Holdings (CRWD)
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CrowdStrike (NASDAQ:CRWD) is an expanding cybersecurity firm offering a range of services including workload and endpoint security, threat intelligence, and cyberattack response services.
The company’s robust and affordable products have fueled its rapid growth. In the fourth quarter, CrowdStrike reported a 33% year-over-year increase in subscription revenue, totaling $795.95 million. Additionally, the company saw $49.39 million in quarterly services revenue, indicating untapped potential in the services segment as demand for integration services is expected to rise with the AI boom.
Moreover, CrowdStrike boasts impressive quantitative metrics, with a free cash flow margin of 32.75% and a five-year compound annual growth rate (CAGR) of 65%.
In essence, CRWD stock presents a compelling opportunity for sustained growth. Don’t miss out!
CyberArk Software (CYBR)
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CyberArk (NASDAQ:CYBR) is a key player in cybersecurity with momentum on its side. Recently, Wells Fargo (NYSE:WFC) highlighted CyberArk as a momentum stock with bullish prospects, suggesting sustained growth driven by market-based anomalies.
Chris Harvey of Wells Fargo believes that stocks like CyberArk are poised to outperform the market due to secular growth trends in technology. CyberArk boasts a 16.98% five-year CAGR and a strong leveraged free cash flow margin of 14.19%.
Digging deeper into CyberArk’s distinguishing features reveals its strong performance in the fourth quarter earnings report. The company exceeded revenue and earnings-per-share targets, with $582 million in annual recurring revenue, signaling potential for market share expansion.
While CyberArk’s fundamentals are solid, the stock’s price-to-sales ratio of 14.72x is slightly above its five-year average. Despite this, CyberArk presents an attractive growth opportunity, supported by its strong fundamentals and positive performance against moving averages.
Okta, Inc. (OKTA)
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Okta (NASDAQ:OKTA) is a leading business-to-business identity protection company with a successful track record spanning over 15 years.
OKTA stock has seen a remarkable growth spurt of nearly 20% in the past month, largely attributed to an upgrade by Bank of America (NYSE:BAC). The financial results have been impressive, with a 19% year-over-year increase in revenue to $605 million in the fourth quarter, driven by a 20% rise in subscription revenue.
Okta’s cloud-based identity management platform integrates with over 7,000 applications, offering scalability and market reach. The company’s solid revenue base positions it well to expand into emerging markets, diversifying revenue streams.
When evaluating OKTA stock’s valuation metrics, the price-to-earnings-growth ratio of 1.65x is below the sector average, suggesting potential undervaluation. Additionally, with a put/call ratio of 0.52x, the options market reflects optimism towards the stock.
On the date of publication, Steve Booyens did not hold (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.
Steve Booyens co-founded Pearl Gray Equity and Research in 2020 and has been responsible for institutional equity research and PR ever since. Before founding the firm, Steve spent time working in various finance roles in London and South Africa. He holds an MSc in Investment Banking from Queen Mary – University of London. Furthermore, Steve has passed CFA Levels 1 & 2 and is working toward his Ph.D. in Finance. His articles are published on various reputable web pages such as Seeking Alpha, TipRanks, Yahoo Finance, and Benzinga. Steve’s articles on InvestorPlace form an interesting juxtaposition between mainstream opinion and objective theory. Readers can expect coverage on frequently traded stocks, REITs, fixed-income funds, CEFs, and ETFs.