The 3 Best Cybersecurity Stocks to Buy in February 2024

Stocks to buy

Cybersecurity has become a paramount concern for businesses and governments alike. According to Check Point research, 2023 was the year of mega ransomware, with 1 in 10 organizations worldwide hit by an attempted attack. As cyber-attacks become more complex, the demand for effective solutions from the best cybersecurity stocks to buy is surging.

Last year, there was an increase in extortion campaigns and data theft. Organizations paid a total of over $1.1 billion in ransom. Hackers have realized how lucrative ransomware attacks are and have increased their attacks on businesses and critical infrastructure. Thus, organizations and governments are adopting measures to curb this menace.

Recognizing the risks, the Securities and Exchange Commission (SEC) set disclosure rules regarding cyberattacks. Now, listed companies must disclose cyberattacks within four business days of the breach. Of course, no organization wants a hit to its reputation, necessitating increased security budgets.

Today, Chief Technology and Security Officers have made cybersecurity an area of urgency. That bodes well for the best cybersecurity stocks to buy that will capitalize on the growing necessity for robust digital defense mechanisms. Here’s why these three companies are poised for growth and should be on your radar.

CyberArk Software (CYBR)

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CyberArk Software (NASDAQ:CYBR) is a leader in privileged access management (PAM). Its security solutions are critical in protecting accounts with access to sensitive information. As digital infrastructures become increasingly complex, the importance of securing privileged accounts has increased.

Today, every organization has a range of identities, including core IT, developers, machines and staff. Each requires a different level of controls and privileges. CyberArk has the best Identity Security Platform to address these challenges.

Demand for its security products is accelerating, as the recent blowout quarter showed. Revenue growth accelerated to 32% in Q4 2023 from 25% in the previous quarter. What’s more, the revenue mix improved, with recurring revenues accounting for over 90% of total revenue.

Particularly impressive was subscription revenue, which increased 70% year-over-year from $88.5 million to $150.3 million. Due to this growth, annual recurring revenue at the end of 2023 increased by 36%, hitting $774 million.

These results impressed Wall Street, leading to a slew of upgrades. Wedbush noted CyberArk’s fiscal year 2024 ARR guidance between $968 and $983 million was ahead of consensus estimates. So, the firm maintained an “outperform” rating on CYBR stock and raised the price target to $285.

CYBR stock is a buy today. Organizations like Indiana University Health continue to prioritize privileged access management to prevent ransomware attacks. Furthermore, financial and compliance requirements and the need to meet cyber insurance conditions make identity solutions like CyberArk’s necessary.

Fortinet (FTNT)

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After meeting earnings expectations by delivering solid growth, this cybersecurity stock deserves a place in your portfolio. Fortinet (NASDAQ:FTNT) offers end-to-end protection spanning the entire digital attack surface. This breadth of offerings, from firewalls to intrusion prevention systems, positions it as the best cybersecurity stock to buy.

Fortinet has a leading market share across secure operations, Secure Access Service Edge (SASE) and secure networking. In network security, it’s the number one vendor, accounting for over 50% of all the firewalls deployed worldwide. Notably, it counts 76% of Fortune 100 as customers.

Fortinet has lagged peers over the last year. However, after the latest results, the stock is due for a catchup. The slump in firewall demand in the secure networking segment that impacted the stock in Q3 2023 is now in the rear-view mirror.

Billings grew 8.5% in the quarter, highlighting a rebound in growth. Its FortiSASE solution was a highlight, closing the first eight-figure SASE deal for 350,000 seats. In total, the cybersecurity giant closed 6 eight-figure deals during the quarter.

Going forward, management expects healthy revenue growth as the total addressable market increases to $208 billion by 2027. It’s rapidly innovating and strengthening its platform. For instance, in Q4 2023, it added 40 new features to its SASE solutions. Moreover, it has integrated machine learning and AI in products across network, endpoint and application security.

If you are looking for a cybersecurity stock that hasn’t run up so much, FTNT stock is the answer. While the ETFMG Prime Cyber Security ETF (NYSEARCA:HACK) is up 40% over the past year, Fortinet is up 17%. With fundamentals rebounding and a massive TAM, Fortinet is among the best cybersecurity stocks to buy.

F5 (FFIV)

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As a leader in application delivery controllers (ADCs), F5 (NASDAQ:FFIV) has positioned itself as one of the best cybersecurity stocks to buy. Today, organizations are hosting their applications in various environments, including the cloud, on-premises and hybrid. Thus, Application Programming Interface (API) security is critical in these environments.

With applications growing exponentially and AI amplifying security concerns, organizations are relying on F5 solutions for application security. Its Web App and API Protection (WAAP) solutions are critical in securing hybrid cloud environments since they manage which applications can access data. As the volume of API attacks surges, F5 Distributed Cloud Services are seeing significant demand.

F5 has been transitioning from hardware-delivered ADCs to software-based ones using a cloud and as-a-service model. To accelerate this shift, it has made several acquisitions, which have set it up for growth opportunities in the software and application security space. Some major ones include NGINX, Shape Security, and Volterra.

On January 29, the company reported solid Q1 FY2024 results. Although revenues declined 1% YoY, software revenues increased 2%. Non-GAAP net income increased from $149 million in the prior year quarter to $205 million. Non-GAAP EPS was $3.43, representing 38.8% YOY growth. For FY2024, management expects non-GAAP EPS to grow 6 to 8%.

Since AI-powered applications leverage APIs of third-party AI models and services, management expects demand for API security tools to grow. As customers begin to deploy AI use cases, F5 Distributed Cloud Services will be critical in protecting the integrity of AI-powered apps and machine learning models.

On the date of publication, Charles Munyi 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.

Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.

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