2 Cybersecurity Growth Stocks to Buy During Market Sell-off

    Home / Business Markets / 2 Cybersecurity Growth Stocks to Buy During Market Sell-off

2 Cybersecurity Growth Stocks to Buy During Market Sell-off

0

In early 2021, KPMG conducted an interesting investigation. The accounting giant reached out to 500 CEOs of the world’s largest companies and asked them which they considered the most significant threat to their organizations. One answer tops the list by a good margin: cybersecurity risk.

It’s a scary thought for business leaders, who are tasked with protecting highly valuable assets in cyberspace as their organizations quickly transition to the digital realm. Customer data is among the most sought after by cyber hackers, and breaches can be a financial and reputational disaster for any business.

Two people who seem worried as they analyze data on computer screens.

Image source: Getty Images.

That’s why many organizations are taking a more proactive approach to cybersecurity, enlisting new advanced tools like threat detection to stay one step ahead of attackers. These two stocks are among the leading developers of this technology, and owning them could give your portfolio a boost as demand surges.

The case of Tenable

Sustainable holding (TENB 0.42% ) is dominating the threat detection and vulnerability management subset of the cybersecurity industry. It currently ranks first in terms of adoption, with its Nessus platform downloaded over 2 million times and used in 30,000 organizations.

The US government maintains a database of known common vulnerabilities and exposures (CVEs) in cyberspace, with over 182,000 threats currently listed. Tenable protects its customers from over 68,000 of them, outperforming all of its competitors, and is also ranked highest for accuracy with the lowest false positive detection rate.

In light of the rapidly changing threat landscape, 2021 was an incredibly strong year for Tenable. The company has seen particularly robust growth among its top spend customers, highlighting the growing importance of cybersecurity in large organizations.

Tenable’s revenue surpassed $ 541 million for the full year 2021, representing a compound annual growth rate of 34% since 2016. But over the same five-year period, its customer base spending $ 100,000 or more all year has increased by 54% per year, now stands at 1,095 companies.

Investors might also be encouraged that none of the Wall Street analysts covering the Tenable stock recommend selling it – in fact, 15 have a buy rating and one has an overweight rating. And while the Nasdaq-100 The tech index has fallen 21% so far this year, the Tenable stock is outperforming with a drop of just 10%. This could be interpreted as investors who feel more comfortable holding Tenable than exposure to the broader market.

While the recent market sell-off is a buying opportunity for a stock like Tenable, it’s important to buy with the long-term in mind, as history shows it’s the surest way to generate positive returns. And as the risk of cyberattacks continues to rise, demand for Tenable’s security tools will only increase over time.

A person wearing a hood uses a computer in a dark room.

Image source: Getty Images.

The CrowdStrike case

As a Sustainable, Crowd Strike Holdings (CRWD 0.54% ) it is also outperforming the tech index, with a decline of just 7.6% in 2022 so far. The company is an endpoint security specialist, which means it focuses on securing the devices used within organizations, be they computers, laptops or mobile devices. As more employees now work remotely, there is a renewed vulnerability associated with accessing corporate networks.

CrowdStrike’s flagship Falcon platform operates in the cloud, protecting the organization’s network from malware and other threats, using both defensive measures and threat-hunting technologies. Falcon proactively searches for malicious programs that may have passed through a particular endpoint undetected and potentially eliminates the threat before it causes damage to the wider network.

As revealed in its recent full fiscal year 2022 earnings report, CrowdStrike now serves 16,325 customers. This figure has increased by 548% in the past three years alone, from 2,516 customers in fiscal 2019. Over the same period, the company’s full-year revenue grew from $ 249 million to $ 1.45 billion.

But revenue growth isn’t just coming from new customers. Existing CrowdStrike customers tend to spend an increasing amount of money once they are on board. In fiscal 2022, 69% of them used four or more modules, compared to 63% in fiscal 2021, which highlights how the threat landscape is expanding, prompting organizations to adopt a suite of more tools. wide.

CrowdStrike is also popular on Wall Street, with a buy-in consensus among the 30 analysts covering the stock, none of whom recommend selling it. The company’s strong leadership for fiscal year 2023 may have something to do with this, as it expects to generate up to $ 2.16 billion in revenue, which represents a 48% growth over the fiscal year. 2022.

But it could be just the beginning. With some estimates suggesting that the cybersecurity industry could be valued at $ 372 billion annually by 2028, CrowdStrike has a huge growth track in the coming years.

This article represents the author’s opinion, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis, even one of our own, helps all of us think critically about investing and make decisions that help us become smarter, happier, and richer.

Leave a Reply

Your email address will not be published. Required fields are marked *