An increasing dependence on cloud computing and the digitization of many work tasks has spurred a rapid rise in cybercrimes. The recent, infamous Colonial Pipeline ransomware attack and the SolarWinds cyber hack back in December 2020 highlight the importance of advanced cybersecurity solutions. Investors’ interest in the cybersecurity space is evident in the First Trust NASDAQ Cybersecurity ETF’s (CIBR) 15.2% returns over the past six months versus the tech-heavy Nasdaq’s 12.9% returns.
Rising inflation and Treasury yields have been motivating investors to rotate away from expensive tech stocks, including several cybersecurity stocks, causing these stocks to suffer price dips. However, because the world is becoming increasingly reliant on digital work applications, the demand for cybersecurity solutions is expected to increase exponentially in the near-term. Indeed, according to Grand View Research, the global cyber security market is expected to grow at a 10.9% CAGR between 2021 and 2028.
Against this backdrop, we think it is wise to bet on Check Point Software Technologies Ltd. (CHKP), NortonLifeLock Inc. (NLOK), Trend Micro Incorporated (TMICY), and Radware Ltd. (RDWR) because the dip in their share prices creates a perfect buying opportunity. These stocks are expected to generate significant returns in the coming months based on their innovative products and services.
Click here to checkout our Cybersecurity Industry Report for 2021
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP develops and markets products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions. Its solutions include CheckPoint Infinity Architecture, which is a cyber-security architecture that protects against 5th and 6th generation cyber-attacks.
Last month, CHKP announced favorable results from the MITRE ATT&CK Endpoint Protection Product Evaluation. The company’s complete endpoint security solution successfully detected 100% of the unique techniques used during the evaluations. This could help boost demand for its solutions in the coming months.
The company’s revenue increased 4.5% year-over-year to $508 million for the first quarter, ended March 31, 2021. Its non-GAAP operating income grew 6.5% year-over-year to $246 million, while its non-GAAP net income increased 2.4% year-over-year to $211 million. The company’s non-GAAP EPS increased 8.4% year-over-year to $1.54.
Analysts expect CHKP’s EPS to increase 6.1% year-over-year to $7.18 in its fiscal year 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Its revenue is expected to be $523.64 million in the about-to-be-reported quarter, ending June 30, which represents a 3.6% year-over-year rise. The stock has soared 11.6% over the past year. It is currently trading 16% below its $139.36, 52-week high ,which it hit on December 29, 2020.
CHKP’s POWR Ratings reflect this promising outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The stock has an A grade for Quality, and a B grade for Value.
Within the Software – Security industry, CHKP is ranked #5 of 24 stocks. To see CHKP’s ratings for Momentum, Sentiment, Stability and Growth as well, click here.
NortonLifeLock Inc. (NLOK)
Formerly known as Symantec Corporation, NLOK provides cyber safety solutions for consumers worldwide. The company offers Norton security solutions as a subscription service that provides protection to desktop and mobile devices against malware, viruses, adware, ransomware, and other online threats on various platforms.
The company launched the Norton 360 for gamers in January 2021. It features dark web monitoring for gamer tags, secure VPN, and fewer product notifications to combat game disruption. With online gaming on the rise, the product is expected to be high in demand because it helps protect the personal information associated with the games.
NLOK’s revenue climbed 9.4% year-over-year to $672 million for fiscal fourth quarter, ended April 2. Its operating income grew 504.5% year-over-year to $266 million. Its income from continuing operations increased 39.6% year-over-year to $208 million. Also, the company’s EPS increased 52.2% year-over-year to $0.35.
For the quarter ending June 30, 2021, analysts expect NLOK’s EPS and revenue to increase 32.3% and 14.2%, respectively, year-over-year to $0.41 and $684.68 million. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock soared 25.7% year-to-date to close yesterday’s trading session at $26.11 after hitting its 52-week high of $26.53.
NLOK’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary ratings system. It has an A grade for Quality, and a B grade for Value, Growth and Sentiment.
To see the additional POWR Ratings for NLOK (Stability and Momentum), click here. It is ranked #1 in the same industry.
Trend Micro Incorporated (TMICY)
Based in Tokyo, Japan, TMICY develops and sells security-related software for computers and the Internet. It also provides user protection solutions that consist of endpoint security, email and Web security, endpoint and gateway suites, SaaS application security, and endpoint detection and response.
This month, TMICY launched a new, co-built SaaS solution with Snyk. It is the first of its kind designed to provide continuous insight into open-source vulnerabilities for enhanced risk management and drive data-driven decisions. The company also launched a first-of-its-kind OT-native endpoint security solution this month, which is specifically designed to provide cybersecurity without interruption to ICs environments. These innovative solutions might provide TMICY an edge over its peers.
The company’s net sales increased 5.9% year-over-year to 44.59 billion yen ($408.2 million) for the fiscal first quarter, ended March 31. Its operating income grew 20.8% year-over-year to 12.23 billion yen ($111.91 million), and its ordinary income for the quarter came in at $12.13 billion yen ($111 million) compared to $12.03 billion yen ($110.16 million) in the prior-year period.
Analysts expect TMICY’s annual revenue to increase 145.5% year-over-year to $1.67 billion in its fiscal year 2021. The stock is currently trading 24.1% below its $64.25 52-week high, which it hit on August 25, 2020.
It’s no surprise that TMICY has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Stability, Value and Quality.
Click here to see TMICY’s ratings for Momentum, Growth and Sentiment. TMICY is ranked #4 in the Software – Security industry.
Radware Ltd. (RDWR)
Cyber security and application delivery solutions provider RDWR’s solutions integrate Distributed Denial of Service protection, Web application firewall (WAF) and Application Delivery Controllers (ADC) technologies to enable its customers to provide cyber-attack mitigation solutions for a range of applications. It sells its products primarily to independent distributors, including value-added resellers, original equipment manufacturers, and system integrators.
On April 29, RDWR announced that Netsync will offer RDWR’s Cloud DDoS Protection Service to State, Local and Education (SLED) agencies across the United States as part of Netsync’s offerings. The collaboration is expected to widen the company’s market reach, leveraging its Cloud DDoS Protection Service.
RDWR’s revenue increased 11% year-over-year to $67 million for its fiscal first quarter, ended March 31. Its non-GAAP operating income grew 55% year-over-year to $7.50 million, while its non-GAAP net income increased 21.2% year-over-year to $8 million. The company’s non-GAAP EPS increased 21.4% year-over-year to $0.17.
Analysts expect RDWR’s EPS to increase 12.5% year-over-year to $0.72 in its fiscal year 2021. It surpassed consensus EPS estimates in three of the trailing four quarters. Its revenue is expected to increase 13% year-over-year to $66.07 million for the quarter ending June 30, 2021. The stock has soared 22.2% over the past year to close yesterday’s trading session at $28.06. It is currently trading 12.2% below its $31.96 52-week high, which it hit on February 10.
RDWR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Growth and Quality.
Click here to access RDWR’s ratings for Momentum, Value, Stability and Sentiment. It is ranked #2 in the same industry.
Click here to checkout our Cybersecurity Industry Report for 2021
CHKP shares were trading at $116.57 per share on Tuesday afternoon, down $0.37 (-0.32%). Year-to-date, CHKP has declined -12.29%, versus a 11.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More…
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