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, as represented by the First Trust NASDAQ Cybersecurity ETF (CIBR), have outperformed the broader market in the last year. CIBR has provided a total return of 59.4% compared to the Russell 1000's total return of 46.9% over the past 12 months. All numbers throughout are as of March 10, except for the Russell 1000 return figure which is as of March 9.
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.
|Best Value Cybersecurity Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|CACI International Inc. ( CACI)||223.21||5.6||15.2|
|Ribbon Communications Inc. ( RBBN)||8.00||1.2||15.4|
|Check Point Software Technologies Ltd. (CHKP)||114.20||16.0||19.1|
- CACI International Inc.: CACI International is an information technology products and services company. The company 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. Ribbon reported net income of $124 million for Q4 2020 versus a net loss of $150 million in Q4 2019 as well as a 51.6% year-over-year (YOY) increase in quarterly revenue. The company attributed a significant portion of the revenue increase to its acquisition of ECI Telecom Group, Ltd., which closed on March 3, 2020.
- Check Point Software Technologies Ltd.: Check Point Software Technologies develops and builds both software and hardware products for information technology (IT) security. The company offers network and gateway security services, data and endpoint security services, and management solutions. Check Point saw net income fall 0.6% YOY as revenue increased by 3.7% YOY for Q4 2020. The company said its business saw growth in areas including cloud, network and remote access security during the quarter.
These are the cybersecurity stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Cybersecurity Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Fortinet Inc. ( FTNT)||175.77||28.7||34.9|
|CACI International Inc. (CACI)||223.21||5.6||34.4|
|Booz Allen Hamilton Holding Corp. ( BAH)||78.04||10.8||30.4|
- Fortinet Inc.: Fortinet is a network security company that offers cybersecurity solutions to a range of enterprises, service providers, and government organizations. Its systems utilize a variety of security technologies including firewall, VPN, antivirus, intrusion prevention, antispam, and more. Fortinet's net income climbed by 24.1% YOY for Q4 2020 while revenue grew by 21.0% YOY. Billings were up sharply.
- CACI International Inc.: See company description above.
- Booz Allen Hamilton Holding Corp.: Booz Allen Hamilton is a technology and management consulting services company. The company provides analytics, digital, engineering, and cyber solutions, among other services. It serves customers around the world.
These are the cybersecurity stocks that had the highest total return over the last 12 months.
|Cybersecurity Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|CrowdStrike Holdings Inc. ( CRWD)||199.10||44.1||335.3|
|Zscaler Inc. ( ZS)||181.43||24.7||312.9|
|Cloudflare Inc. ( NET)||69.43||21.4||234.8|
|First Trust NASDAQ Cybersecurity ETF (CIBR)||N/A||N/A||59.4|
- CrowdStrike Holdings Inc.: Crowdstrike Holdings is a holding company whose subsidiaries offer a cybersecurity platform that provides a range of products including antivirus, endpoint detection and response, device control, vulnerability management, threat intelligence, and more. On March 5, CrowdStrike completed the acquisition of Humio, a high-performance cloud log management and observability technology company, for approximately $352 million in cash and $40 million in stock and options.
- Zscaler Inc.: Zscaler provides security software and related services. The company offers a cloud-based web and mobile security platform that also addresses threat protection, cloud application visibility, and networking challenges. For its Q2 FY 2021, ended January 31, Zscaler reported a net loss of $67.5 million compared to a net loss of $29.2 million for Q2 FY 2020 as well as 55.1% YOY growth in revenue. The company attributed the revenue growth in part to an acceleration of the company's digital transformation strategy.
- Cloudflare Inc.: Cloudflare is an application software company. Among Cloudflare's offerings are solutions for cybersecurity, analysis, domain registration, load balancing, and video streaming.
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.
YCharts. "Financial Data." Accessed Mar. 10, 2021.
Ribbon Communications Inc. "Ribbon Communications Inc. Reports Fourth Quarter and Full Year 2020 Financial Results." Accessed Mar. 10, 2021.
Check Point Software Technologies Ltd. "CHECK POINT SOFTWARE TECHNOLOGIES REPORTS2020 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS," Pages 1 and 7. Accessed Mar. 10, 2021.
Fortinet Inc. "Fortinet Reports Fourth Quarter and Full Year 2020 Financial Results." Accessed Mar. 10, 2021.
CrowdStrike Holdings Inc. "CrowdStrike Completes Acquisition of Humio." Accessed Mar. 10, 2021.
Zscaler Inc. "Zscaler Reports Second Quarter Fiscal 2021 Financial Results." Accessed Mar. 10, 2021.