4 Cybersecurity Stocks to Protect Your Portfolio as Cyber Crime Soars

The cybersecurity sector continues to surge

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Ever since remote work became essential for many companies due to Covid-19, the cybersecurity sector blew up. Organizations were forced to work in the cloud computing space for the first time and were faced with new security challenges. This caused the prices of many cybersecurity stocks to soar. Demand within the cybersecurity sector should only continue to grow as more companies start to utilize online platforms to run their business operations. While the industry will continue to grow, it is worth noting that there is a lot of competition. Many cybersecurity companies operate differently, meaning it will be hard to pick who has the dominant platform. If you are interested in investing in the cybersecurity space, consider researching more into the following stocks:

1. Okta

Okta Inc (NASDAQ:OKTA) is based in San Francisco and provides cloud software that helps companies secure user authentication into their applications. Its services are built upon Amazon Web Services and can allow its users to log into multiple systems with a single login. Okta provides its services to a wide array of customers such as universities, small businesses, and government agencies. These services are available in the U.S. and internationally.

Okta has beaten its earnings consistently, but it seems that its earnings are dropping while revenue is increasing. While revenue growth is a great sign, Okta continues to see negative earnings per share. Its strongest financial statement is the balance sheet as the company has increased its asset column much quicker than it has racked up liabilities. Its cash flow statement looks good as well since its operating cash flow is increasing each year. In 2019 the company generated $15 million in operating cash flow and by the end of 2021, this number increased to $127 million.

2. CrowdStrike

CrowdStrike Holdings Inc (NASDAQ:CRWD) is a cloud software company that provides protection for computers and servers. CrowdStrike built the Falcon platform, which helps to prevent attacks like malware and much more. It takes advantage of machine learning, a type of artificial intelligence, to detect and prevent security threats. Companies that work with artificial intelligence are great investments because AI will teach itself and get better as time goes on.

CrowdStrike has been rapidly increasing its revenue, showing signs that its product is attracting new customers. Even though its revenue is increasing it seems that it is not generating positive income. The company has been able to turn its negative cash flow positive within the past few years, which is arguably more important than its negative net income. In 2019 CrowdStrike lost $22 million in operating cash flows. In 2021 it was able to generate over $350 million in operating cash flow, showing investors that it has been managing its cash much better than it did previously. 

3. Palo Alto Networks

Palo Alto Networks Inc (NASDAQ:PANW) is a multinational cybersecurity stock with its headquarters in Santa Clara, CA. It offers firewall products and cloud-based offerings, such as one of its firewall products called Panorama. This is a network security management software that gives companies the ability to configure security features in one centralized management software.

Palo Alto Networks is doing decent fundamentally with its best attributes being positive cash flow and revenue growth. Its earnings per share is negative meaning it is not a profitable company based on income. However, positive cash flow is key for companies because it means their business is putting money in its pocket each month. The company is repurchasing its own stock with some of this cash flow, which is similar to getting paid a dividend as an investor.

4. CACI International

CACI International Inc (NYSE:CACI) is headquartered in Virginia and was founded in 1962. CACI International provides expertise and technology to support the government with national security missions. These services include technology for the defense, homeland security, and healthcare sectors of the government. The company operates in both domestic and international operations. In addition to the U.S. federal government, it also provides services to the United Kingdom and Europe. Its international services include software products and IT services to commercial and government customers.

This company has a low market cap of just $6 billion and is trading at a discount according to its P/E ratio of just 16. CACI has managed to increase its revenue and earnings each year. The company is producing an operating cash flow of $592 million for the 12-month period ending on the June 30, 2021. This is up 82% from the same period in 2018 showing investors massive growth.

 

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