Top Cybersecurity Stocks for Q1 2022

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 underperformed the broader market over the past year. CIBR has provided a total return of 11.2% over the past 12 months, below the Russell 1000's total return of 21.1%. These market performance figures and all statistics in the tables below are as of Jan. 10, 2022.

Here are the top three 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.

Best Value Cybersecurity Stocks

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.

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• A10 Networks Inc.: A10 Networks is a provider of secure applications and solutions for on-premises, multi-cloud, and edge-cloud environments. Its software and hardware solutions enable its customers to secure their applications, users, and infrastructure from Internet, web, and network threats. In late October, the company announced financial results for Q3 of its 2021 fiscal year (FY), the three-month period ended Sept. 30, 2021. Net income increased nearly 12-fold as revenue grew 15.5% compared to the year-ago quarter. Net income was significantly boosted by a large benefit from income taxes.
• CACI International Inc.: CACI International is an information technology company. It provides cloud-powered solutions, software-as-a-service (SaaS), mobile and network security, and other digital solutions. It primarily serves defense, intelligence, and civilian agencies of the U.S. government. The company announced in mid-December that it has completed its acquisition of SA Photonics Inc., a provider of multi-domain photonics technologies for free-space optical (FSO) communications. CACI first announced that it had agreed to acquire SA Photonics for total consideration of $275 million in early November.
• Leidos Holdings Inc.: Leidos Holdings is a technology, engineering, and science solutions and services company. It uses artificial intelligence and machine learning-driven analytics to provide cybersecurity solutions that protect and defend mission-critical networks.

Fastest-Growing Cybersecurity Stocks

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 year-over-year (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.

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• A10 Networks Inc.: See above for company description.
• CrowdStrike Holdings Inc.: CrowdStrike Holdings is a holding company whose subsidiaries offer a cybersecurity platform that provides products and services including endpoint security, cloud security, managed security services, threat intelligence, identity protection, log management, and more. In late November, the company announced that it has completed its acquisition of SecureCircle, a SaaS-based cybersecurity service. CrowdStrike first announced the acquisition at the beginning of November. The financial terms of the transaction were not disclosed. An EPS growth rate was not calculated for the table above because the company reported a negative EPS in the most recent quarter.
• Zscaler Inc.: Zscaler is a cloud-based information security company. It provides web and mobile security, threat protection, networking solutions, and cloud application visibility services to customers worldwide. An EPS growth rate was not calculated for the table above because the company reported a negative EPS in the most recent quarter.

Cybersecurity Stocks With the Most Momentum

These are the cybersecurity stocks that had the highest total return over the past 12 months.

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• Fortinet Inc.: Fortinet is a cybersecurity company serving enterprises, service providers, and government organizations worldwide. The company provides a broad, integrated suite of security technologies, including intrusion prevention (IPS), firewall, VPN, and antivirus.
• Mimecast Ltd.: Mimecast is a global provider of next-generation cloud security and risk management services for email and corporate information. It offers an integrated suite of proprietary cloud services in order to protect its customers' email and corporate systems from business and data security risks. The company announced in early December that it has agreed to be acquired by funds advised by global private equity firm Permira for approximately $5.8 billion. The transaction is expected to close in the first half of 2022, after which Mimecast will become a privately held company with no publicly traded shares.
• A10 Networks Inc.: See above for company description.

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