Cybersecurity stocks have steadily moved higher as 2020 has progressed, largely due to the work from home trend resulting from the coronavirus. Just about every cybersecurity stock has escalated in price as companies look for digital security safeguards for employees working from their houses, condos and apartments. As a result, the demand for cybersecurity tools has never been greater. Furthermore, cybersecurity solutions providers that offer services through subscriptions are proving especially popular.
Let’s take a closer look at three cybersecurity stocks with a chance to move even higher as the pandemic plays out in the months ahead: Okta (OKTA), CrowdStrike (CRWD) and Zscaler (ZS).
Businesses of all types are looking for cloud-based software that monitors parties using the network, facilitates the management of digital access rights and simplifies projects for those working from home. OKTA provides these exact solutions. OKTA products are centered on a cloud-based system that stores and secures device, application and user profiles.
OKTA’s quarterly earnings growth rate is more than double that of the companies that make up the rest of the Software and Services industry. The POWR Ratings have OKTA ranked 13 of 47 stocks in this space with an A Trade Grade and a B Buy & Hold Grade.
OKTA price returns are in the green in every timespan: 633% across the prior three years, 50% in the past year and 67% in the past six months. The most bullish of analysts have set a price target of $220 for the stock.
OKTA is enjoying powerful growth amongst its clients who spend six figures or more. The company raked in more than $30 million in free cash flow last quarter alone. OKTA’s year-over-year revenue growth will likely come in around the $800 million mark in fiscal 2021.
Businesses, governments and educational institutions alike need endpoint protection provided through the cloud. CRWD provides this service and more. CRWD’s stock has soared this year as more and more entities turn to the cloud for work.
The POWR Ratings have CRWD rated as a Strong Buy thanks to its A Trade Grade, A Buy & Hold Grade and A Peer Grade. CRWD has a one-year price return of nearly 30% along with a six-month price return just under 100%. The analysts’ average price target for CRWD is $110.42, meaning there is more than 11% upside remaining.
It appears as though society is permanently shifting toward remote work, a transition that will provide the likes of CRWD with that much more business in the years ahead. CRWD will soar even higher should a second wave of covid-19 move through the United States.
Even if the virus dissipates in the months ahead, this company’s cloud security solutions will still be in demand, justifying a quick return to its 52-week high of $103.80 in the near future.
Nowadays, businesses need secure access to their managed applications both in the cloud and at in-house data centers. ZS makes this feat possible. ZS also empowers clients to connect to managed applications including Microsoft Office software. This ability is quite important considering the shift away from traditional office work toward working from home.
The POWR Ratings have ZS ranked 6th of 23 stocks in the Software – Security category with an A Trade Grade and an A Peer Grade. The analysts’ high price target for ZS is $115, meaning there is about $25 of upside remaining in the stock. However, ZS has a forward P/E ratio of nearly 600 so there is an argument to be made that it is overvalued at its current price.
ZS price returns are especially impressive across the past three and six-month periods, coming in at 104.96% and 115.12%, respectively. The company’s 2019 price return was just under 19%.
Look for ZS to move back toward its 52-week high of $112 and change as coronavirus cases continue to spike throughout the South, Southwest and Midwest.
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CRWD shares were trading at $99.95 per share on Thursday afternoon, up $1.26 (+1.28%). Year-to-date, CRWD has gained 100.42%, versus a -2.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…
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