3 Best Cybersecurity Stocks to Buy

WHY CYBERSECURITY STOCKS ARE A GOOD GROWTH SECTOR

Interest in cybersecurity has increased exponentially because of news coverage of the malware attacks on the US government and recent ransomware attacks on Cox Media Group, the Colonial Pipeline, and JBS Food Processing. These events, coupled with changes in business networking resulting from the pandemic, have created a great deal of business for cybersecurity companies. Here are three companies at which to look before you make an investment.

CROWDSTRIKE HOLDINGS INC (NASDAQ: CRWD)

Crowdstrike is considered the standard by which all other cybersecurity companies are measured. Financially, Crowdstrike's 1Q21 revenue increased by 70% over that from 1Q20. Its market cap is near $60 billion, and, with Crowdstrike's growth opportunities, the cap could increase to $100 billion within the next three years.

Crowdstrike's growth potential is based on the company's continued product expansion into new markets, such as observability. This expansion includes the acquisition of other companies as well as partnerships. Crowdstrike uses channel-based marketing to reach customers of all sizes, another key to future growth.

ZSCALER (NASDAQ: ZS)

Zscaler has built its client base by providing security for cloud-based companies and those with remote workers. It is the cybersecurity leader in secure access service edge (SASE).

Zscaler has increased its customer base by over 50% in three years, growing from 3,250 in 2018 to over 5,000 in 1Q21. Revenue increased by 44% between 2018 and 2020, totaling $431.3 million. Revenue for 2021 is projected to increase by some 70%, to over $600 million.

Zscaler's projected growth is because there will be at least a tenfold increase in the number of companies worldwide that will switch to SASE cybersecurity.

FORTINET INC (NASDAQ: FTNT)

Fortinet is considered to provide the best cybersecurity hardware in the business. Its balance sheet bears that out, with $710.3 million in revenue in 1Q21, a 22.95% increase year over year. Its net profit margin for the quarter is 15.09%. Its net revenue for 2020 was $2.59 billion.

Fortinet's challenge is moving away from cybersecurity hardware to cloud-based security, or SaaS products (Software as a Service). To that end, in 2020, Fortinet acquired OPAQ, a SASE provider. Additional acquisitions can be made using Fortinet's $2 billion cash on hand, as reported for 2020.