Cyber security stocks: 4 Biggest Cybersecurity ETFs in 2022

IBD Videos Get market updates, educational videos, webinars, and stock analysis. Analysts say a new wave of startups seems to be taking share from industry incumbents. Private equity firm Vista Partners, a long-standing investor in KnowBe4 , on Oct. 13 acquired KnowBe4 in a $4.6 billion leveraged buyout.

A lower https://forex-world.net/-to-sales ratio is considered better, and Check Point Software’s price-to-sales ratio is above the sector median of 1.96. The ratio of price to free cash flow is significantly better than the sector median. Cybersecurity stocks have been outperforming the market lately and therefore are more likely to be graded as expensive. F5 networks didn’t have a bad quarter, but its results show the surge in post-COVID security spending has run its course. The company’s revenue of $700 is up almost 2.0% versus last year but was fully priced in by the market.

Growth Drivers

But in its most recent quarter, the company, which has the largest market cap of any cybersecurity company, lowered its forward guidance. And the bigger issue with CRWD is that it is not yet profitable at a time when investors have growing concerns about an “earnings recession” in 2023. Zscaler got started with a software-as-a-service product designed for cloud computing protection, but it has since added new internet security and end-user monitoring products. End-user monitoring is increasing with so many people now working from home. And with global spending on cloud computing expected to exceed $1 trillion annually this decade, Zscaler is well-positioned to profit from this massive secular growth trend. The Global X Cybersecurity ETF provides investors with a reliable source of exposure to 27 cybersecurity stocks, making it a highly concentrated fund.

• During the fourth quarter, revenues soared by 92% to $126.1 million and the customer base rose by 50% to over 10,000.
• Fortinet’s third-quarter sales were $1.15 billion, up 33% year over year.
• On the previous earnings call, management flagged how deals are starting to face more scrutiny and are taking longer to close.
• Data breaches were up another 14% year-over-year during the first quarter of 2022.

Although it is trading at $117.65, far from its 12-month high of $242.00, its one-year target estimate is $232.73. It was relatively easy to convince the people with whom we spoke that everyone, be it companies or individuals, needs a cyber strategy. Data protection is one of our critical cyber themes, and it’s notable to see anything that widens the circle beyond GDPR in Europe. We were traveling in Europe, where every single investor was widely aware of the General Data Protection Regulation . Many in the U.S. might think that the U.S. doesn’t have any such laws, but the California Consumer Privacy Act was passed in 2018 and came into effect in 2020. On January 1, 2023, the California Privacy Rights Act, which expands and amends the prior law, could have many companies in for a rude awakening.

Are Companies Going to Keep Spending?

Much like the broader market, PANW went through a nasty decline back in December and has since rallied nicely so far in 2023. But even after this year’s gains, shares are still down from the $180s in late August and the low $200s it reached last April. Click ticker symbols for real-time stock quotes & charts, financial news, and company comparisons from Yahoo! Finance.

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• They own the Go to Meeting brand used for managing remote networking and meetings.
• Security has become a top priority for corporations and there is an expected rise in allocation to security spending to combat potential threats.
• Like its peer Palo Alto Networks, it has maintained double-digit percentage growth and is highly profitable.

In addition, many software companies are using artificial intelligence to get a competitive edge. Google-parent Alphabet last year acquired cybersecurity firm Mandiant in an all-cash $5.4 billion deal. This was made possible by a successful adoption of its cloud offerings, with revenue continuing to grow into the fourth quarter, where it could exceed the $125 million mark, 4% higher than expectations. Furthermore, the company reported that it had returned over $2 billion to its shareholders through share repurchases year-to-date. Moreover, recent trends have increased the firm’s clout and competitiveness within the industry, making now the perfect time for new investors to take advantage of this incredible investment opportunity. Offer software instead of hardware, and the first to get in, so they have a lead.

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The return on assets indicates how profitable a company is in relation to total assets. The higher the return on assets, the more efficient and productive a company is at managing its balance sheet to generate profits. It has a 15.2% return on assets, which is above the sector median. Since the COVID-19 outbreak started, spending on cybersecurity has skyrocketed. Due to the necessity of cloud computing and remote operations, organizations now confront new security challenges.

PLTR’s long-term partnership with the U.S. government and its ability to continuously produce stable revenue are reasons why many investors remain confident in the company’s future. Despite current short-term issues, several analysts still believe that Palantir will be able to generate strong gains in terms of revenue and earnings in the future. Additionally, the stock is down substantially and trading at a massive discount based on its tremendous outlook ahead.

It also has a rank of 87 for year-over-year sales increases over the last five years. The components consider a company’s success in growing its sales and operating cash flow on a year-over-year basis for the latest-reported fiscal quarter and on an annualized basis over the last five years. According to The Wall Street Journal, China has denied its involvement in hacking into businesses or governments in other countries. However, the sophistication, profile of the attacks’ victims, level of resources and specific malware used by China-based hackers in the past says otherwise. Cybersecurity stocks have benefited from the possibility of more online attacks.

The company uses AI to help automate the process of monitoring large and complex sets of data, relieving some of the burden of busy IT teams. It’s also been steadily expanding its platform’s capabilities with new modules that include cloud-based security and data monitoring. To slow down hackers, more companies are focusing on internal security threats though a strategy known as Zero Trust. In addition, traditional security measures aim to keep the bad guys out of corporate networks.

Cisco Systems (CSCO)

The company also recently announced a partnership with Singapore’s Quantum Engineering Programme to develop next-gen security for quantum computing. According to the Identity Theft Resource Center, the number of data breaches set a new record in 2021, with the number of incidents jumping 68% from 2020 and up 23% from the previous high in 2017. Data breaches were up another 14% year-over-year during the first quarter of 2022. Overall, cybercrime is on the rise at a double-digit percentage pace. In addition, Rapid7 and Qualys specialize in vulnerability management services.

In addition, the company has a net retention rate of more than 130%, which is unheard of with software companies. That’s because many cybersecurity companies provide the same or similar services, and that can make it difficult for someone without intimate knowledge of the sector to differentiate among the companies. And itsZero Trust Exchange allows all users of networks to safely browse the internet and access applications no matter what device they’re on or where they are. That means if you have a tolerance for risk and a long time horizon, now would be a time to consider buying cybersecurity stocks. Here are seven cybersecurity stocks to buy and hold for safe gains in the future.

This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is financial, investment, legal, tax or other advice and no reliance should be placed on it.

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This ETF is also considered recession-proof since cyber security is a necessity in today’s world. With the move towards more digital payments, it will get a lift. A global information technology consulting company out of Montreal.

CrowdStrike Holdings is a cloud-based company that provides endpoint security. Cybersecurity is a critical service that prevents problems like malware erasing a system, your database being broken into, or the theft of personal information. It protects data, networks, and devices while ensuring the integrity, confidentiality, and availability of information. The threat of a war in Ukraine has shaken the stock market in recent weeks. The turmoil could pave the way for some sectors to see outsize benefits.

This has meant that established cyber security stocks giants are also moving into the sector, either launching their own offerings or acquiring existing firms. For example, Microsoft has started selling its cybersecurity products at a discounted rate, undercutting a lot of smaller firms. And Alphabet acquired cybersecurity firm Mandiant in a $5.4 billion deal in 2022.