What Are the Best Cybersecurity Stocks For the Long Term?

Since the beginning of the COVID-19 epidemic, the economy has experienced significant changes. Economic downturns intensified long-term trends toward company digitalization and the shift from in-office to hybrid and remote work.

Because of the new hybrid workplace and increased reliance on cloud-based infrastructure, cybersecurity has become even more crucial and difficult. Cybersecurity firms offer services to protect electronic data from theft or harm.

Cybersecurity businesses employ both software and technology to guarantee that computer equipment and data are not exploited. Individuals, corporations, and the government are among the consumers served by the sector.

Zscaler Inc. 

It is a firm that develops security software. Customers are protected from cyberattacks and data loss by its Zero Trust Exchange cloud security technology. It offers web and mobile security, threat prevention, and networking solutions, among other things.

The main distinction is that Zscaler is a niche player that focuses on allowing all network users to safely browse the internet and access apps regardless of device or location.

In late May, the corporation released financial figures for Q3 FY 2022, which concluded on April 30, 2022. Zscaler’s net loss increased to $101.4 million in the third quarter, up from $58.5 million the previous year.

Revenue increased 62.6% year on year. Operating expenditures climbed faster than revenue, contributing to the quarter’s larger net loss.

Okta Inc. 

It is a software business that creates web apps. The company is an independent identity supplier whose cloud platform enables businesses to securely link individuals with electronic devices such as mobile phones and desktop PCs.

Okta has published financial data for the first quarter of its 2023 fiscal year (FY), which concluded on April 30, 2022. The net loss increased to $242.7 million from $109.2 million in the previous quarter. Revenue increased 65.3% year on year.

Okta’s operational expenditures increased substantially faster than sales, resulting in the quarter’s overall net loss.

CrowdStrike (CRWD) 

It is the largest cybersecurity business by market capitalization, making it one of the most well-known companies in the industry.

CrowdStrike, founded in 2011, is a relative newcomer to the industry, with CRWD shares only trading publicly since 2019.

With that stated, CrowdStrike was born on the cloud, and its business model revolves around migrating a company’s existing security measures to the cloud. As a result, it is particularly well-suited for firms that enable remote work in some manner.

The bulk of the Fortune 100 firms are clients of the company. This translates into increased revenue, which the corporation converts into free cash flow.

Akamai (AKAM)

It is a content delivery network (CDN) that ensures data traveling across the internet reaches safely its destination. Malware Protection, a new edge-based solution that “detects and filters harmful files submitted to web apps and APIs,” was just released by the business.

When looking for cybersecurity stocks to purchase and hold, consider the company it keeps. In the instance of Akamai, 50% of the Fortune 500 are clients. Chris Markovich had no holdings (direct or indirect) in the securities referenced in this article as of the date of publishing.

The author’s thoughts in this post are subject to the InvestorPlace.com Publishing Guidelines. Chris Markovich has been following the financial market for almost five years as a freelance financial copywriter. Since 2019, he has been contributing to InvestorPlace.

Fortinet (FTNT)

This firm specializes in VPN services. These services are quickly becoming best practices for people and businesses seeking to defend their cybersecurity. In addition, the firm is quickly becoming the go-to hardware option for businesses trying to improve the security of their data centers.

FTNT stock fell 13% in the first half of 2022, although it recovered from its 52-week low. Fortinet, unlike some of the stocks on our list, routinely generates a profit.

One possible explanation is that, unlike Palo Alto, Fortinet has grown its cloud business organically. If sales growth continues, the stock is likely to have reached an investable bottom.

Microsoft (MSFT)

Many investors may be unknowingly exposed to the cybersecurity business. This is because many investors possess Microsoft (MSFT) shares.

While not a pure-play cybersecurity company, Microsoft’s cybersecurity division generates north of $15 billion in sales. Security solutions can be integrated into the company’s cloud-based Office 365 software.

In 2021, Microsoft invested more than $500 million to purchase RiskIQ and CloudKnow Security. There may be some disagreement about the company’s dividend, but MSFT stock is fundamentally a growth investment.

When it comes to companies to purchase and hold for the long term, quality counts, and Microsoft fulfills the bill. The company’s capacity to create free cash flow is one reason behind this (FCF).

Palo Alto Networks (PANW)

Palo Alto Networks (PANW) is well-known for its firewall products. In fact, by revenue, the firm is the largest pure-play cybersecurity organization. Palo Alto Networks is a major provider of internet security solutions to a global client base.

Morgan Stanley (MS) ranked PANW shares as the best option in the sector in March 2022.

App-ID security platform from the firm provides customers with proprietary technology that identifies network traffic by application, user, and content.

Customers benefit from increased insight into possible hazards and threats for all traffic and applications. In recent years, the corporation has acquired several cloud-native startups. That might explain why it is still not profitable continuously.

However, Palo Alto maintains it has completed its acquisitions for the time being. Growth investors should have minimal concerns if the firm continues to generate double-digit revenue.

Wrapping up

With the globe getting increasingly tense, there may be no better time than now to explore investing in the finest cybersecurity stocks to purchase. Primarily, under the backdrop of Russia’s invasion of Ukraine, Western powers are racing toward big confrontations with aggressive state actors.

As a result, both government institutions and private businesses must strengthen their internet security. This article focuses on the best cybersecurity stocks for the present market climate for investors who wish to evaluate the finest stocks to ease some of the anxieties dominating the markets.

Keep an eye out for assets that might prosper during challenging times. Long-term tailwinds exist for cybersecurity, and our Factor Grades and Quant Ratings can assist you in making critical tactical investment decisions.

In turbulent markets, finding skilled investment resources is a fantastic approach to being a successful investor.

Related Article: Why is Cybersecurity Important?