12 Cybersecurity Stocks to Watch in 2020
As life becomes more and more digitally focused, cybersecurity becomes an increasingly important product on the market. And as that occurs, cybersecurity stocks are going to be increasingly important to the tech stocks sector. That means lucrative opportunities for you in cybersecurity stocks.
Plenty of high publicity cyberattacks have occurred in recent times against individuals, corporations and even governments. Cybersecurity companies like Palo Alto Networks and Fortinet are required to investigate the attacks that have occurred. And, more importantly, prevent future attacks from happening. Here are some statistics:
- Global spending on cybersecurity is expected to hit $133.7 billion by 2022.
- 62% of businesses had a phishing or social engineering attack hit them in 2018 and that number is likely growing.
- And data breaches revealed 4.1 billion records in the first half of 2019 alone.
There are many similar statistics to be found. It’s no wonder that cybersecurity stocks have become so popular. But which ones you should be keeping an eye on?
We’ve done the work so you don’t have to. Here are 12 cybersecurity stocks to watch in 2020 to keep in mind as you protect your fortunes.
Top Cybersecurity Stocks List of 12 Companies
With that said, let’s take a deeper dive into four companies that we believe are especially worth watching right now:
Palo Alto Networks (NYSE: PANW)
Palo Alto Networks is a cybersecurity stock mostly known for cutting-edge firewalls. These have won the cybersecurity company much acclaim. But in the age of cloud computing, traditional network protection is no longer enough. In fact, the cloud-based cybersecurity market is expected to grow by approximately 21% per year for the next couple of years.
And the Santa Clara-based Palo Alto Networks isn’t standing pat. Nor is it allowing the competition to just move in. They have been expanding into cybersecurity solutions that are tailored for enterprise-level cloud-based computing. These include but extending beyond mere firewalls. And, the firm has also been investing heavily in artificial intelligence (AI) platforms.
These innovations allow their technology to identify and eliminate potential threats in real time. This is superior to waiting for data breaches to already have occurred before launching a defense.
Since its inception, Palo Alto has been quite a success story. They currently do work for 65,000 enterprise-level clients around the globe. These include many Fortune 500 companies. As a result, the stock has been one of the most consistent performers in the cybersecurity space.
Be cautious, though. The stock has been volatile throughout the past year. It has had some massive price swings. But after a steep 30 point drop off in November, the stock has been slowly climbing back towards its one year high.
Is it finally stabilizing out? Perhaps. But, it’s also important to note that over the past year the cybersecurity stock has underperformed the S&P 500 by about 6%.
Crowdstrike Holdings Inc. (Nasdaq: CRWD)
Crowdstrike Holdings is a cybersecurity stock that offers its clients endpoint security, threat intelligence, and cyber attack response services. Crowdstrike’s clients include industries like finance, healthcare, and energy. High profile clients include Amazon Web Services (AWS), Goldman Sachs, and the Massachusetts Institute of Technology. They also have been running cybersecurity investigations for the United States government.
In case you were wondering, endpoint security or endpoint protection is a specific cybersecurity practice. It attempts to innoculate remotely connected devices such as mobile phones, tablets, laptops and others, against cyber attacks.
The existence of these remote endpoints create convenient avenues of attack for hackers and bad actors. So, it’s important to protect them against such threats. Crowdstrike’s endpoint security works to make sure these devices are all following compliance standards.
Crowdstrike’s main platform is called the Falcon. It uses a cloud structure to protect endpoints using AI technology. This AI tech includes machine learning and other innovations. It unifies antivirus protection, endpoint detection and response (EDR), IT hygiene, managed threat hunting, and threat intelligence.
The company, which was founded in 2011, recently had its IPO in June. The stock has not faired well overall. After breaking $100 in August, the cybersecurity stock tumbled all the way down to a low of $44.58.
It began 2020 trending upwards. Can it continue this trend? The company has seen very strong revenue growth over the last few years. And that is great reason for optimism. But, the bottom line about the bottom line is that this company is still likely far away from profitability. The company could be a solid longer term play if:
1 . Revenue growth continues to be robust and
2. The company is able to reign in some of the costs.s
Fortinet (Nasdaq: FTNT)
Another cybersecurity stock from sunny Sunnyvale, California, Fortinet creates and markets cybersecurity software, apps and service. Some of these include firewalls, endpoint security, intrusion prevention, and anti-virus programs.
The company’s security fabric includes security processors, an intuitive operating system, and applied threat intelligence. The approach provides a unified protective experience that is heavily automated. And, it also draws on the resources of artificial intelligence.
Fortinet’s flagship enterprise firewall platform is called Fortigate. It works with a variety of similar products to simplify security infrastructure. The majority of Fortune 500 companies are customers.
And Fortinet’s stock has been nothing but a winner throughout its lifespan. Though some years have been better than others. And despite some volatility in the stock price, its upward trend has really picked up over the last two years.
It’s now trading at nearly $120, climbing from $77.49 in October. September 2019 quarterly financials showed nearly $80 million dollars profit on $547 million of revenue. That’s a profit margin of over 14%.
Revenue growth was up 20% and income grow by nearly 36%. Diluted earnings per share (EPS) also climbed over 39% to $0.46 per share. Fortinet’s stock is clearly a beautiful way to keep protecting your healthy stock profit margins.
CyberArk (Nasdaq: CYBR)
CyberArk is a cybersecurity stock that offers privileged account security. Their technology is mostly used by financial services, retail, healthcare and government clients.
A privileged account, such as an admin account, can be a major security weakness in an organization. This is because it can enable a negative actor to have full access to a company’s IT infrastructure. They could potentially disable security, steal confidential information, commit financial fraud and disrupt operations.
More than half of the Fortune 500 companies use CyberArk for cybersecurity.
CyberArk’s stock took a significant dip from July through October. It shed about a third of its value. But its been on an uptrend since as the stock begins to approach its previous-52 week high of $148.74.
Third quarter financials looked very positive across the board. The company earned $15 million on $108 million of revenue. That’s a top line gain of 27% and a bottom line increase of 88% year over year.
Whereas over the past year the S&P has been up 23%, CyberArk’s share price has grown a whopping 72%. Overall profit margin of the firm for 2018 was nearly 14%.
A Final Note on Cybersecurity Stocks
As far as tech goes, it’s a good bet that cybersecurity is only going to be an increasingly important slice of the pie. The opportunities for huge growth in cybersecurity stocks is there. Don’t leave yourself defenseless when the market starts to soar without you. Start watching these important stocks today.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.