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Shweta Kumari

2 Cybersecurity Stocks to Keep Your Eye On

While technology is transforming businesses at a scale and speed never seen before, it is also bringing challenges, especially on the security front. This, in turn, necessitates the need for companies to build resilience to withstand cyber threats.

Due to increasing cyber-attacks with enterprises rapidly digitalizing their operations and migrating to cloud platforms, the cybersecurity industry has benefited significantly over the past year.

According to the latest edition of Cisco Systems, Inc.’s (CSCO) annual Security Outcomes Report released in December 2022, cybersecurity resilience emerges as a top priority for 96% of executives surveyed, as 62% of organizations say security incidents impacted their business operations.

Moreover, the cybersecurity market’s revenues are projected to reach $173.50 billion in 2023. The industry is poised to witness significant growth in the foreseeable future, driven by the increasing number of cyber-attacks with the emergence of e-commerce platforms, deployment of cloud solutions, and proliferation of smart devices.

Furthermore, the global cybersecurity market is projected to grow at a CAGR of 12.3% from 2023 to 2030. Given the industry’s promising growth prospects, fundamentally sound cybersecurity stocks Fortinet, Inc. (FTNT) and Check Point Software Technologies Ltd. (CHKP) could be ideal buy-and-watch options this year.

Fortinet, Inc. (FTNT)

FTNT offers comprehensive, integrated, and automated cybersecurity solutions internationally. It sells FortiGate hardware and software licenses, which enable a range of networking and security features. It also provides security subscriptions, technical support, and training services.

On February 6, 2023, FTNT unveiled new ASIC technology, FortiSP5, to accelerate the convergence of networking and security across every network edge. FortiSP5 delivers unparalleled levels of power-efficient performance to open new frontiers for securing the branch, campus, 5G, edge compute, operational technologies, and more. This new introduction is expected to reap significant gains for the company.

For the fiscal third quarter that ended September 30, 2022, FTNT’s total revenue increased 32.6% year-over-year to $1.15 billion. Its non-GAAP operating income rose 45.3% from the prior-year quarter to $324.90 million. Non-GAAP net income attributable to FTNT and non-GAAP net income per share attributable to FTNT came in at $262.70 million and $0.33, up 58.3% and 65% from the prior-year period, respectively.

Analysts expect FTNT’s EPS and revenues to increase 59.3% and 34.4% year-over-year to $0.39 and $1.30 billion, respectively, for the fiscal fourth quarter (ended December 31, 2022). The company surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.

The stock has gained 10.4% over the past three months to close the last trading session at $51.99.

FTNT’s POWR Ratings reflect its solid prospects. It has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an A grade for Quality and a B for Growth. The stock is ranked #4 of 21 stocks in the Software - Security industry. Click here to see the other ratings of FTNT for Value, Momentum, Stability, and Sentiment.

Check Point Software Technologies Ltd. (CHKP)

CHKP is a leading provider of cyber security solutions to corporate enterprises and governments globally. It offers network security, endpoint security, data security, and management solutions to enterprises, service providers, small and medium-sized businesses, and consumers.

On February 1, 2023, Frost & Sullivan recognized CHKP as a strong innovator and a growth leader in the Frost Radar™ Global Cloud Native Application Protection Platform (CNAPP) report.

Anh Tien Vu, Industry Principal at Frost & Sullivan, said, “Check Point continues to leverage its strong cybersecurity portfolio and has taken a cloud-centric approach over the last 2 years to come up with a feature-rich CNAPP solution that features capabilities needed for customers to protect their cloud assets, applications, network, and workloads with one unified platform.”

In the fiscal third quarter (ended September 30, 2022), CHKP’s total revenues increased 8.2% year-over-year to $577.60 million. The company’s non-GAAP operating income and non-GAAP net income increased marginally year-over-year to $262.70 million and $221 million, respectively. Also, its non-GAAP EPS came in at $1.77, representing a 7.3% year-over-year improvement.

The consensus EPS estimate of $2.36 for the fiscal fourth quarter (ended December 31, 2022) represents a 4.7% improvement year-over-year. The consensus revenue estimate of $636.24 million for the to-be-reported quarter indicates a 6.2% increase from the same period the prior year. The company has an excellent earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.

The stock has gained 5.2% over the past six months to close the last trading session at $125.51.

CHKP’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. It has an A grade for Quality. It is ranked first within the same industry.

Click here to see the POWR Ratings of CHKP for Growth, Value, Momentum, Stability, and Sentiment.

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FTNT shares were trading at $53.41 per share on Tuesday afternoon, up $1.42 (+2.73%). Year-to-date, FTNT has gained 9.25%, versus a 8.50% rise in the benchmark S&P 500 index during the same period.



About the Author: Shweta Kumari


Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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