9 Cybersecurity Stocks to Buy Now

Okta

• Market value: $4.6 billion
• Analysts' average price target: $128.79 (3.6% implied upside)

Qualys (QLYS (opens in new tab), $124.31) is a provider of a comprehensive suite of cloud-based security and compliance solutions. It manages all IT assets for any endpoint, whether on-premises, cloud or mobile. The system also helps to not only discover breaches, but to provide effective remediation actions.  

This all-in-one strategy is important because there is a trend for customers to reduce the number of applications. This tends to lower the costs and complexity while improving the overall results.

The Qualys platform manages over 2 trillion security events per year and handles more than 6 billion IP scans and audits. There are also more than 20 apps, such as for integrated IT, security protections and compliance.

In the latest quarter, Qualys posted revenues of $130.8 million, up 19% year-over-year, and net income of $28.3 million. The company has more than 10,000 customers, including 70% of the Forbes Global 100.

Qualys has been bolstering its AI capabilities, which should help with growth – and keep QLYS among the best cybersecurity stocks. In October, the company acquired the assets of Blue Hexagon, "an AI/ML innovator of Cloud Threat Detection and Response solutions," according to the press release (opens in new tab). The company has developed systems to detect patterns and provide insights – in massive data sets – for advanced network threats and risk assessments. 

Fortinet

• Market value: $50.4 billion
• Analysts' average price target: $70.74 (10.1% implied upside)

At the core of Fortinet (FTNT (opens in new tab), $64.27) is a comprehensive system to secure networks. The solutions include firewalls, intrusion prevention systems, data leak prevention, virtual private networks (VPNs) and secure web gateways. These provide for not only strong security but improved network performance.  

Besides these technologies, Fortinet also has offerings like encryption applications, universal zero trust network access, and security for LANs (Local Area Networks) and WLANs (wide-area networks). 

"What Fortinet does well is that it offers multiple security functions on one platform at an attractive price as a bundle," said Hendi Susanto, portfolio manager at Gabelli Funds.

In the fourth quarter, revenues shot up by 33% to $1.28 billion and product revenues jumped by 43% to $540.1 million. Cash flows from operations were $528.1 million.

The company has over 635,000 customers. These include 63% of the Fortune 500 and 68% of the Global 2000.

Over the years, Fortinet has invested heavily in its AI solutions, including using sophisticated algorithms to process more than 100 billion cyber events every day. This has allowed for better real-time prevention of breaches, as well as improved remediation. 

For investors seeking out the best cybersecurity stocks, FTNT is worth a closer look.

Okta

• Market value: $12.3 billion
• Analysts' average price target: $91.87 (11.8% implied upside)

Okta (OKTA (opens in new tab), $82.16) is a leading developer of technologies for identity, which allows for secure access, authentication and automation. This is for a variety of systems like cloud and mobile apps, on-premises servers and APIs (Application Programming Interfaces).

While there are big competitors in the identity market, including blue chip stock Microsoft (MSFT (opens in new tab)), Okta has the advantage of being neutral. It does not sell any other software that might compete with customers.  

Okta has also built a strong ecosystem. The company currently boasts about 7,000 pre-built integrations.

There are secular trends that are driving Okta's business. The move to a hybrid workforce means there is demand for securing external systems and applications.  

Another important trend is Zero Trust security. This assumes that an organization will be compromised and that cybersecurity systems need to be more comprehensive, such as with response and recovery to breaches. 

Not surprisingly, growth has been robust for Okta. During the fourth quarter, revenues jumped by 33% year-over-year to $510 million and cash flows came to $76 million. 

Another reason OKTA is on this list of the best cybersecurity stocks is that the company has over 17,600 customers. In fact, one of the latest is OpenAI, which is the creator of the hugely successful ChatGPT app.

Okta's platform has the benefit for extension into new market categories, such as with SIEM (Security Information and Event Management). In other words, there should be continued momentum for years to come.

Palo Alto Networks

• Market value: $57.7 billion
• Analysts' average price target: $220.66 (15.7% implied upside)

Palo Alto Networks (PANW (opens in new tab), $190.76) is one of the world's largest providers of cybersecurity solutions. The company's software and hardware allows for sophisticated network security, secure access service edge (SASE) and cloud security. There is also threat intelligence consulting. 

With Palo Alto Networks' massive scale, the company is able to invest about $1 billion in research and development (R&D) each year. This is two to five times what its pure-play rivals spend. The R&D investments mean that the company has released a large number of updates, upgrades and new systems.  

And these investments are paying off for one of Wall Street's best cybersecurity stocks. In its fiscal second quarter ended Jan. 31, Palo Alto Networks reported a 26% increase in revenues to $1.7 billion. Net income was $84.2 million compared to a loss of $96.5 million in the year-ago period.

"The company is a key beneficiary of vendor consolidation, as evidenced by triple-digit growth in both $5-million-plus and $10-million-plus deals last quarter,” said Joel Rubenstein, senior portfolio manager at New Capital by EFG.

Nancy Tengler, CEO and chief investment officer at Laffer Tengler Investments, has Palo Alto Networks as among her firm's "12 Best Ideas portfolio."  She notes: "We used Q4 weakness to add and we would do so again if the report disappoints. Long-term it's hard not to love this name."

CyberArk Software

• Market value: $5.8 billion
• Analysts' average price target: $176.44 (24.3% implied upside)

CyberArk Software (CYBR (opens in new tab), $141.97) is a developer of identity security systems. Its solutions include single sign-on, multi-factor authentication, directory services and lifecycle management. These are available on-premises, the cloud and the hybrid cloud. There is also a rich set of solutions for analytics.  

For the fourth quarter, CYBR revenues increased by 12% to $169.2 million. However, the subscription business saw an 86% spike in revenue to $88.5 million. In other words, the company's cloud strategy is getting lots of traction. 

Currently, CyberArk has more than 8,000 customers across 110 countries. Its customer base has more than half the Fortune 500 and about 35% of the Global 2000.

A strong identity system is certainly a must-have for security and CyberArk's solution has the kinds of functions that enterprises need.  

"I've spoken to dozens of customers and partners in the last few months, and they all face similar challenges," said Udi Mokady, founder and CEO of CyberArk, on the latest earnings call. "Digital transformation is leading to an explosion of identities, both human and machine. Implementing Zero Trust strategies remains complex and time consuming. And attacker innovation is only accelerated with the emergence of new technology and new attack vectors."

This is why CyberArk is one of the best cybersecurity stocks around.

CrowdStrike Holdings

• Market value: $30.3 billion
• Analysts' average price target: $166.70 (29.6% implied upside)

CrowdStrike Holdings' (CRWD (opens in new tab), $128.64) cybersecurity platform is called Falcon. It's a cloud-native system that processes huge amounts of data to detect attacks and remediate breaches in real-time. This has been key for leveraging AI. The more data ingested, the smarter the system gets. Falcon also has 23 cloud modules that offer workload security, identity protection, log management, data protection and vulnerability management. 

Even with the macroeconomic headwinds, CRWD has continued to grow at an impressive rate. In the fourth quarter, the company's revenues jumped by 48% year-over-year to $637.4 million and cash flows were $273.3 million, up from $159.7 million from the year prior. It also has $2.71 billion in the bank.

CrowdStrike's "land and expand strategy" has been working quite well. The adoption rate for five or more modules is 62%, and 22% for seven or more modules.

There is also plenty of room for long-term growth for this top cybersecurity stock.  CRWD addressable market opportunity is roughly $97.6 billion.

Splunk

• Market value: $14.8 billion
• Analysts' average price target: $117.78 (32.0% implied upside)

Founded 20 years ago, Splunk (SPLK (opens in new tab), $89.26) is a pioneer of analyzing log data, which is information generated from IT systems like ERPs (enterprise resource planning). This has proven useful in detecting cybersecurity vulnerabilities in real-time. But another important use case is observability. This is about monitoring the performance of IT systems and apps. 

However, the company has had to make tough transitions, such as migrating to the cloud.  This has also involved a change in the business model. In the meantime, Splunk has been the target of shareholder activists. Back in October, Starboard Value took a stake in the company.

Yet it looks like Splunk's restructuring is starting to make an impact. In the fourth quarter, revenues jumped by 39% to $1.25 billion and the net income came to $269 million. Nearly 800 customers had ARR (annual recurring revenues) of over $1 million, up by 115 during the past year. 

Then again, Spunk's solution is a good fit for complex IT environments. On the earnings call (opens in new tab), CEO Gary Steele said: "The reality is on-prem and hybrid will both be here for the long haul, and Splunk has a strong competitive advantage given our solutions help strengthen our customers' resilience across multi cloud and hybrid environments."

SentinelOne

• Market value: $4.2 billion
• Analysts' average price target: $20.59 (39.1% implied upside)

Founded in 2013, SentinelOne (S (opens in new tab), $14.80) is a pioneer in using AI for cybersecurity. The platform is called Singularity XDR and it has various autonomous capabilities. These include providing real-time monitoring for all endpoints, IoT, cloud containers and cloud workloads. Singularity XDR also has comprehensive remediation systems. 

The AI-first strategy has made S one of the best growth stocks. During the fourth quarter, revenues soared by 92% to $126.1 million and the customer base rose by 50% to over 10,000. The number of customers with ARR (Annual Recurring Revenue) of more than $100,000 grew by 74% to 905.  

A key factor to the success of the go-to-market strategy has been partnerships with Managed Security Service Providers (MSSPs). These organizations are becoming critical in helping customers manage the complexities of cybersecurity. They also generally have large customer bases and focus on best-of-breed technologies. 

Building an ecosystem of MSSPs is no easy feat. In other words, SentinelOne's base is a valuable competitive advantage. And as a result, S will likely keep showing up on these lists of the best cybersecurity stocks to buy for years to come.

Zscaler

• Market value: $16.0 billion
• Analysts' average price target: $155.09 (40.7% implied upside)

Founded in 2007, Zscaler (ZS (opens in new tab), $110.25) is one of the early players in the cloud-based cybersecurity market. The company's core platform is the Zscaler Zero Trust Exchange. It is an alternative to the traditional approach to cybersecurity, which has focused on on-premise corporate networks.

The Zscaler Zero Trust Exchange has multiple benefits. It allows users to have secure and reliable access to cloud applications. Additionally, the technology secures workloads for the public cloud and private cloud. And there is also a system for protecting IoT (Internet-of-Things) devices. 

The underlying foundation of the Zscaler Zero Trust Exchange is massive. Every day, it processes more than 280 billion transactions and prevents 9 billion security violations. This data – which gives off from more than 300 trillion signals – has been invaluable for leveraging artificial intelligence (AI) and machine learning. It's also why in addition to being one of Wall Street's best cybersecurity stocks, ZS also tends to pop up on lists of the best AI stocks.

In the fiscal second quarter ended Jan. 31, Zscaler reported revenues of $387.6 million, up 52% on a year-over-year basis. The company's cash flows were $89.5 million and it had $1.9 billion in the bank.

A critical factor for the growth has been Zscaler's innovation. In the latest major release of its cloud software, there were more than 150 new features.  

The focus on innovation has led to strong customer loyalty. Consider that the Net Promoter Score (NPS) – which shows whether a customer will recommend a product – for ZS is at 80.  This is more than two times the average for SaaS (software-as-a-service) companies.