The growth of the digital economy with increasing numbers of online and mobile interactions has led to a consequent rise in digital crime. As a result, the cybersecurity market has seen significant growth.
Therefore, I present quality cybersecurity stocks Fortinet, Inc. (FTNT), Check Point Software Technologies Ltd. (CHKP), and Radware Ltd. (RDWR), which look poised for growth and could be ideal buys now.
The increasing number of cyber-attacks with the emergence of e-commerce platforms, deployment of cloud solutions, and proliferation of smart devices are some of the factors driving the market’s growth. Cyber threats are evolving with the increase in the usage of devices with intelligent and IoT technologies.
As a result, the US cybersecurity market has witnessed robust growth over the last few years. While dismissing cybersecurity as a task was common, it is now increasingly becoming the dominant part of top-level strategic planning.
Revenue in the US cybersecurity market is projected to reach $68.68 billion in 2023. Also, it is expected to grow at a CAGR of 8.5% until 2028, resulting in a market volume of $103.40 billion.
Moreover, e-commerce businesses are now focusing on integrating network security solutions into their electronic and IT security systems. As a result, the adoption of these technologies to combat cyber-attacks is on the rise, leading to an expansion in the demand for network security solutions.
Furthermore, the global cybersecurity market is projected to grow at a CAGR of 12.3% from 2023 to 2030.
Take a look at the stocks mentioned above:
Fortinet, Inc. (FTNT)
FTNT provides cybersecurity and networking solutions worldwide. It offers FortiGate hardware and software licenses that provide various security and networking functions.
FTNT’ trailing-12-month gross profit margin of 75.44% is 49.8% higher than the 50.37% industry average. Its trailing-12-month net income margin of 19.41% is 631.3% higher than the 2.65% industry average.
FTNT’s revenue grew at a CAGR of 26.9% over the past three years. In addition, its net income grew at a CAGR of 93.8% over the past five years.
During the fiscal fourth quarter that ended December 31, 2022, FTNT’s total revenue increased 33.1% year-over-year to $1.28 billion. Non-GAAP net income grew 69.9% year-over-year to $349.7 million, while its non-GAAP net income per share increased 76% year-over-year to $0.44.
FTNT’s EPS is expected to increase 31.5% year-over-year to $0.32 for the fiscal second quarter ending June 2023. The company’s revenue for the same quarter is expected to increase 23.8% year-over-year to $1.28 billion. Additionally, it has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of FTNT have gained 31.7% over the past six months to close the last trading session at $60.49.
FTNT’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality and a B in Growth and Sentiment. It is ranked #2 out of 22 stocks in the Software - Security industry.
Beyond what is stated above, we’ve also rated FTNT for Value, Stability, and Momentum. Get all FTNT ratings here.
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP develops, markets, and supports a range of products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions.
On February 13, 2023, CHKP introduced Check Point Quantum SD-WAN, a new software blade in the Check Point Quantum Gateways. Check Point Quantum SD-WAN combines the highest level of security with optimized network and internet connectivity to protect branch offices from fifth-generation cyberattacks.
CHKP’s trailing-12-month EBIT margin of 37.56% is 722.8% higher than the 4.57 industry average. Its trailing-12-month gross profit margin of 87.64% is 74% higher than the 50.37% industry average.
CHKP’s revenue grew at a CAGR of 6.9% over the past year. In addition, its EPS grew at a CAGR of 8% over the past year.
CHKP’s total revenues rose 4.3% year-over-year to $566.2 million in the fiscal first quarter that ended March 31, 2023. The company’s non-GAAP net income increased 7% year-over-year to $217.9 million, while its non-GAAP EPS increased 14.6% year-over-year to $1.80.
Street expects CHKP’s revenue for the fiscal second quarter ending June 2023 to increase 3.2% year-over-year to $589.27 million. The company’s EPS for the same quarter is expected to increase 15.5% year-over-year to $1.89. Additionally, it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 1.5% over the past nine months to close the last trading session at $119.66.
CHKP’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. CHKP also has an A grade for Quality. It is ranked #3 in the same industry.
Click here for the additional POWR Ratings for CHKP (Growth, Momentum, Value, Stability, and Sentiment).
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR develops, manufactures, and markets cyber security and application delivery solutions for applications in the cloud, on-premise, and software-defined data centers worldwide.
RDWR’s trailing-12-month gross profit margin of 81.64% is 62.1% higher than the 50.35% industry average. Its trailing-12-month CAPEX/Sales of 3% is 27.1% higher than the 2.36% industry average.
RDWR’s revenue grew at a CAGR of 5.9% over the past five years. In addition, its levered free cash flow grew at a CAGR of 84.5% over the past three years.
RDWR’s revenue reached $69.04 million in the fiscal first quarter, which ended March 31, 2022. Its revenue in the Europe, Middle East, and Africa region was $29.7 million for the first quarter of 2023, an increase of 6% year-over-year. Non-GAAP net income was $6.08 million, while its non-GAAP net earnings per share came in at $0.14. Also, its non-GAAP gross profit came in at $56.84 million.
Analysts expect RDWR’s revenue for the fiscal second quarter ending June 2023 to be $69.20 million. Its EPS is expected to come in at $0.13 for the same quarter.
The stock has gained marginally over the past month to close the last trading session at $17.63.
RDWR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
RDWR also has an A grade for Quality and a B in Stability. It is ranked first in the same industry.
To access additional ratings for RDWR’s Growth, Value, Sentiment, and Momentum, click here.
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FTNT shares were trading at $60.77 per share on Thursday morning, up $0.28 (+0.46%). Year-to-date, FTNT has gained 24.30%, versus a 6.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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