Top Cybersecurity Stocks for Q1 2021

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 CEA Cybersecurity ETF (CIBR), have outperformed the broader market in the last year. CIBR has provided a total return of 35.2% compared to the Russell 1000’s total return of 21.5% over the past 12 months, as of December 9, 2020. All statistics in the tables below are as of December 10.

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.

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.

Source: YCharts

• NortonLifeLock Inc.: NortonLifeLock engages in the consumer cyber safety business, offering solutions that enable consumers to protect their electronic devices, online privacy, identity, and home networks. The company announced in early December that it agreed to acquire German IT security firm Avira for approximately $360 million from Investcorp Technology Partners. Avira provides cybersecurity and privacy solutions in Europe and key emerging markets. The deal is expected to close in the fourth quarter of the company’s 2021 fiscal year (FY), which aligns with the first quarter of calendar year 2021.
• 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.
• 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.

Fastest Growing Cybersecurity Stocks

These are the cybersecurity stocks with the highest year-over-year (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.

Source: YCharts

• A10 Networks Inc.: A10 Networks is a provider of computer networking products and security solutions. It offers a range of hardware, software, and cloud-based products, such as controller, firewall, protection systems, and more.
• Ribbon Communications Inc.: Ribbon Communications provides network solutions for communications services providers and enterprises. It offers session border controllers, policy and routing servers, media and signaling gateways, cloud, mobility solutions, and more.
• 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. The company announced in early December that it had acquired Panopta, an innovator in software-as-a-service (SaaS) platforms. The financial terms of the deal were not disclosed.

Cybersecurity Stocks with the Most Momentum

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

Source: YCharts

• Cloudflare Inc.: Cloudflare is an application software company. Among Cloudflare’s offerings are solutions for cybersecurity, analysis, domain registration, load balancing, and video streaming.
• 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. Zscaler reported a net loss of $55.0 million as revenue rose 52.3% in the company’s Q1 FY 2021, which ended October 31, 2020. The company’s net loss widened from a net loss of $17.1 million in the year-ago quarter as cost of revenue and operating expenses rose at a faster pace than revenue.
• 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. The company announced in the latter half of September that it had agreed to acquire Preempt Security, a provider of Zero Trust and conditional access technology for real-time access control and threat prevention. The deal was valued at approximately $96 million. The transaction was completed before the end of the company’s quarter, Q3 FY 2021, which ended October 31, 2020.

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