Cybersecurity companies provide services to protect electronic information from theft or damage. Businesses in the cybersecurity industry utilize both software and hardware to ensure that computing devices and data are not misused. The industry serves a broad array of customers including individuals, businesses, and government, among others. Some of the leading names in cybersecurity include Check Point Software Technologies Ltd. (CHKP) and NortonLifeLock Inc. (NLOK).
Cybersecurity stocks, represented by the First Trust NASDAQ Cybersecurity ETF (CIBR), have slightly underperformed the broader market over the last year. CIBR has provided a total return of 33.8% compared to the Russell 1000s total return of 34.7% over the past 12 months. These market performance figures and all statistics in the tables below are as of June 7, 2021.
Here are the top 3 cybersecurity stocks with the best value, the fastest growth, and the most momentum. Note that the companies on our list are primarily pure-play cybersecurity companies, while CIBR includes a wider variety of related stocks in its portfolio.
These are the cybersecurity stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- CACI International Inc.: CACI International is an information technology products and services company. It provides information assurance and security as well as systems integration, reengineering, electronic commerce, and related services.
- Ribbon Communications Inc.: Ribbon Communications provides network solutions for communications services providers and enterprises. It offers policy and routing servers, media and signaling gateways, cloud, mobility solutions, and more. The company announced in late April financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended March 31, 2021. Ribbon Communications net loss widened to $44.7 million from $33.2 million in the year-ago quarter as revenue rose 22.0%. The companys other expenses were significantly larger than in the same three-month period a year ago, deepening the net loss for the quarter.
- Check Point Software Technologies Ltd.: Check Point Software Technologies develops market enterprise software. The company offers web security, threat prevention, security management, support programs, and more.
These are the top cybersecurity stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
- Mimecast Ltd.: Mimecast is a provider of cloud security and risk management services for corporate information and email. It offers email management services aimed at protecting enterprises against risks including spam, viruses, and malware.
- Leidos Holdings Inc.: Leidos Holdings is a global science and technology company engaged in the provision of scientific, engineering, systems integration, and technical services and solutions in the areas of national security, engineering, and health. The company announced on May 7 that it had completed its acquisition of ship design firm Gibbs & Cox Inc. for approximately $380 million. The acquisition was announced on Feb. 23, 2021. On May 4, Leidos announced the appointment of Christopher Cage as chief financial officer (CFO).
- CrowdStrike Holdings Inc.: CrowdStrike Holdings is a holding company whose subsidiaries offer a cybersecurity platform that provides a range of products and services including endpoint security, cloud security, managed security services, threat intelligence, identity protection, log management, and more. The company recently announced financial results for Q1 FY 2022, which ended April 30, 2021. CrowdStrikes net loss widened to $82.9 million from $19.2 million in the year-ago quarter. Due to the net loss, we cannot calculate an EPS growth rate for the above table. Revenue for the quarter rose 70.1%. The company recorded a significantly larger provision for income taxes in the most recent quarter compared to the year-ago quarter, which deepened the net loss.
These are the cybersecurity stocks that had the highest total return over the last 12 months.
|Cybersecurity Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Cloudflare Inc. (NET)||85.84||26.7||194.6|
|CrowdStrike Holdings Inc. (CRWD)||215.41||48.6||129.3|
|CommVault Systems Inc. (CVLT)||78.75||3.6||97.2|
|First Trust NASDAQ Cybersecurity ETF (CIBR)||N/A||N/A||33.8|
- Cloudflare Inc.: Cloudflare develops cybersecurity software solutions. It offers a global cloud platform that provides a range of services, including load balancing, video streaming, security, domain registration, and more.
- CrowdStrike Holdings Inc.: See above for company description.
- CommVault Systems Inc.: CommVault Systems offers data management software applications and related services. The companys offerings are designed to protect and manage data throughout its lifecycle. CommVault announced in early May financial results for Q4 FY 2021, which ended March 31, 2021. Net income fell 29.9% despite a 16.1% increase in revenue. An income tax expense in the most recent quarter compared to an income tax benefit in the year-ago quarter affected net income.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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