Inflation has moved into an endemic phase. The annual rate of inflation is much closer to the Federal Reserve’s target rate of around 2%.
However, the last few years have made it abundantly clear that we live in a digital world. That means that individuals and businesses must protect our identity and personal data like never before. And that makes cybersecurity stocks a solid investment opportunity in 2024 and beyond.
A report by Mordor Intelligence forecasts the cybersecurity market to grow at a compound annual growth rate (CAGR) of 11.44% and will be valued at over $350 billion by the end of this decade.
The industry’s growth potential has resulted in premium valuations, but some discounts are available. The cybersecurity stocks listed below offer investors an opportunity to generate long-term returns.
Palo Alto Networks (PANW)
Palo Alto Networks (NYSE:PANW) is trading above $300 per share with an eye-popping forward P/E ratio of 57. This isn’t a stock for value investors by any means. However, if you’re a growth investor, PANW stock is still a name you’ll want to consider.
The company more than tripled its revenue between 2018 and 2023. The company expanded its product offerings beyond one single firewall-based solution to three distinct product lines that focus on cloud security, network security, and security operations. This expansion is helping the company build a wider moat. The corporation can sell additional services to its customers making it more cost-prohibitive for them to switch.
Analysts are forecasting sales growth of 18.70% in 2024. However, with a stock price that’s climbed by over 130% in the last 12 months, you may wonder if the growth is already priced into the stock.
It may be. The consensus price target of 34 analysts is $317.65 which only offers a 1.60% upside. That being said, the majority of analysts give PANW stock a Buy or Strong Buy rating. This is a buy on any dip.
Fortinet (FTNT)
If there is such a thing as getting cybersecurity on a budget, then Fortinet (NYSE:FTNT) may be appealing. This was a point I raised when putting FTNT stock on a list of cybersecurity stocks to buy in December. Many companies, especially the companies that don’t represent high-value targets, want cybersecurity protection but may not want (or be able to pay for) best-in-class products.
With a product portfolio of over two dozen products, that’s a niche where Fortinet excels. And, as the sector consolidates, investors can look at Fortinet’s growing free cash flow (FCF), which puts it in a prime position for future acquisitions.
Although the company has had slight misses on the top line in its last two quarters, revenue and earnings are both up year-over-year. Furthermore, Fortinet checks in with a forward P/E ratio of around 35.
CyberArk (CYBR)
Since 2020, Zero Trust has become a dominant theme in the cybersecurity industry. That’s the primary focus of CyberArk Software (NASDAQ:CYBR). The company prioritizes zero trust with its Identity Security Platform.
CyberArk defines its Identity Security Platform as the industry’s most comprehensive platform to secure human and machine identities. In its last quarter, the company reported total annual recurring revenue of $705 million which is up by 38% year-over-year.
That could be a reason why CYBR stock has been a recent favorite of analysts. The company is rated as a Strong Buy among 24 analysts with an average price target of $236.29. That price target implies an 8% upside.
On the date of publication, Chris Markoch did not have (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.
