3 Cybersecurity Stocks to Fortify Your Portfolio With

Thanks to an increasingly technology-centric world, the need for products and services that can provide cybersecurity has never been bigger. It is paramount to protect the data of companies and government organizations, and cybersecurity is currently in full focus after the latest high-profile hacking headline. If you missed the news, Russian hackers were able to gain access to the U.S. Treasury and other government agencies along with major U.S. technology and accounting companies thanks to a breach of SolarWinds Corp’s Orion network monitoring product.

If businesses weren’t focusing on cybersecurity before this incident, they are certainly looking into it now. While many of the companies that provide cybersecurity software, products, and services have had a great run in 2020, there’s still a lot of opportunity for them ahead. Below, we’ve put together a list of 3 cybersecurity stocks to fortify your portfolio with.

CrowdStrike Holdings Inc (NASDAQ:CRWD)

First up is CrowdStrike, a company that offers a cybersecurity platform that is specifically designed to prevent attacks like the one with SolarWinds from occurring. The company offers 11 cloud-based modules on its Falcon platform through a software-as-a-service subscription model. The services it provides include antivirus, endpoint detection and response, device control, managed threat hunting, and more. While we still don’t know the extent of the recent cyber attack, it’s clear that enterprises and governments will be looking to boost their cybersecurity spending going forward, which will benefit a company like Crowdstrike.

CrowdStrike is a leader in endpoint detection, which is the process of using platforms to gather data from endpoint devices like computer hardware and subsequently analyze the data to reveal any cyber threats or issues. The stock’s performance has been astounding in 2020, and it is up over 345% year-to-date. In Q3, the company reported 87% year-over-year subscription revenue growth and a record 1,186 net new subscription customers.

Zscaler (NASDAQ:ZS)

Next, we have Zscaler, a company that is helping users safely browse the internet and access applications regardless of their device, location, or network. With remote work quickly becoming the new normal, a company like Zscaler that helps people work safely stands to benefit greatly over time. Zscaler offers two main cloud services, Zscaler Internet Access, and Zscaler Private Access. Zscaler Internet Access securely connects users to externally managed applications while Zscaler Private Access offers authorized users secure access to internally managed applications that are hosted in enterprise data centers and the public cloud.

A brief look at Zscaler’s Q1 earnings report that was released back in early December confirms that the company is continuing to experience accelerated growth. With revenue growth of 52% year-over-year and the fact that the company raised its full-year outlook, it’s clear that Zscaler expects a big 2021. There’s a lot to like about the company’s cross-selling opportunities between its two cloud services and we should see more businesses pursuing a digital transformation next year, which should pay off for Zscaler shareholders.

Palo Alto Networks (NYSE:PANW)

Last on our list is Palo Alto Networks, a company that offers a security platform that helps enterprises, service providers, and government entities to secure all of their users, applications, data, networks, and devices. Palo Alto’s platform uses a traffic classification engine that provides in-depth visibility into all of the traffic and applications at the user level so that companies can minimize cyber threat risks. The company also recently rolled out its next-generation firewall, the K2-Series, which directly targets 5G network deployments by service providers. This firewall could be in high demand with the large-scale rollout of 5G next year.

Pal Alto Networks is a company that should continue to benefit from increased IT security spending and has a more reasonable valuation than many of the other cybersecurity stocks out there. The company reported strong Q1 earnings that saw revenue grow 23% year-over-year to $946 million and has received several recent analyst upgrades, which makes it a great cybersecurity stock to watch heading into the new year.

Final Thoughts

With the surging demand for cybersecurity products and services due to the recent high-profile hacking incident, each one of these companies is in a position to capitalize. Combine that with the fact that organizations are accelerating their digital transformations as a result of the pandemic and you have a great investment opportunity in the cybersecurity space. Just keep in mind that many of these stocks have stretched valuations and have rallied throughout the year, so patiently waiting for a pull back or consolidation before adding shares makes the most sense.