Cybersecurity is a fast-growing industry, so it can be intimidating to come to terms with cybersecurity stocks to sell for fear of making a wrong decision.
As more people work from home and businesses switch to cloud-based platforms to better serve customers or harness the power of generative artificial intelligence, cybersecurity will become even more important. You may think the entire sector is a wise investment, but that’s not true. There are unfortunately many cybersecurity stocks to sell that you should keep out of your portfolio.
Cybersecurity is expected to blossom into a $10.5 trillion industry by 2025, an increase of roughly 300% in just a decade. That’s an appealing target for any entrepreneur looking to meet the demand. Unfortunately, not all companies will be a winning bet, which is why it’s critical to keep an eye out for cybersecurity stocks to sell before they flop even harder.
There are currently more than 3,500 cybersecurity companies out there competing for that $10.5 trillion pie. Companies in a competitive space will face plenty of pricing pressure and lowered profit margins that could make growth challenging.
In addition, the space itself is rapidly changing. Some companies will flourish in that environment, but others will not.
There’s nothing wrong with investing in these companies. But using tools like the Portfolio Grader to ferret out which cybersecurity stocks to sell is a good idea.
Either way, know that this is an exciting, but challenging sector. You should be ready to endure some volatility as you walk down this path.
SuperCom (NASDAQ:SPCB) is a tiny tech company with a market capitalization of less than $3 million. The company provides devices that allow governments to track people criminal offenders who are out of prison.
Products include a GPS tracking platform, house arrest bracelets and monitors, and domestic violence monitoring, informing authorities if an offender abides by court restrictions.
The company, which has customers in Iceland, Romana, Croatia, Finland and the U.S., also offers inmate monitoring services to help guards keep track of inmate movement at detention centers and prisons.
Additionally, SuperCom has a cybersecurity product called Safend Data Protection Suite designed to safeguard organizations and their data in a single software product.
SuperCom’s revenues have grown year-over-year growth in the last five quarters. This company does not prioritize cybersecurity like it does its tracking and security platforms. There is no mention of cybersecurity in SuperCom’s company’s quarterly reports.
The Safend website appears not to have been touched in years, webpages are blank and links to the company’s purported social media channels are dead links.
You should look elsewhere if you want to invest in the cybersecurity space. SPCB stock gets a “D” rating in the Portfolio Grader.
A10 Networks (ATEN)
A10 Networks (NYSE:ATEN) is a California company that works with network security, including on-premises, cloud computing and edge computing. It also staked out a space in providing 5G security as high-speed wireless networking ramped up last year.
But the stock is down 20% this year, triggered by a huge 25% drop in October that coincided with the company issuing preliminary third-quarter revenue projections that were down 19% to 22% from a year ago. The major problem seems to be customers delaying new orders because they are concerned about the economy.
A10’s final Q3 report in November confirmed that picture, with the final revenue numbers of $57.8 million down $14.3 million from last year. It’s part of a recent trend for A10, which also saw revenue down 8% in the first quarter and 3% in the second quarter.
For the fourth quarter, A10 is projecting revenue between $70 million and $80 million (last year’s Q4 revenue was $77.6 million). So while there may be some improvement this quarter, A10 hasn’t returned to growth. It appears 2023 will be a lost year for growth investors.
ATEN stock gets a “D” rating in the Portfolio Grader.
Leidos Holdings (LDOS)
Leidos Holdings (NYSE:LDOS) is a Virginia-based research company that provides various services in information technology, defense, aviation and biomedical research.
It has a large cybersecurity footprint with its work as a federal government contractor. Its products include Packit, which is a threat-based approach to implementing frameworks to improve their clients’ cybersecurity.
While the company’s working in important spaces, the company’s stock performance doesn’t reflect success. LDOS stock is up only 1% on the year, far underperforming the broader market. It took a big dip in the spring after issuing disappointing first-quarter earnings and has been struggling to bounce back ever since.
In the third quarter, LDOS reported revenues of $3.9 billion, which was up from $3.6 billion a year ago. However, the company posted a $396 million loss and posted an EPS loss of $2.91 per share. They attributed the loss to impairment and restructuring charges of $699 million for its Security Enterprise Solutions unit that it bought in 2020.
Acknowledging the business isn’t as valuable as once believed is a tough pill for Leidos and investors to swallow. LDOS stock gets a “C” rating in the Portfolio Grader.
VeriSign (NASDAQ:VRSN) is a tech company that’s one of the world’s largest domain name registry services. It operates the registry for .com and .net internet domains, giving it a monopoly over the most widely used domain extensions.
So the challenge here is, how do you grow the business?
That’s a problem that VeriSign’s running into. While the internet grows in usage worldwide and advances like 5G bring high-speed access even to rural areas, VeriSign’s growth window is pretty small.
The company ended the third quarter with 173.9 million .com and .net domain name registrations, down 0.1% from a year ago. Revenue in the third quarter of $376.3 million was up 5.4% from a year ago.
VeriSign’s stock performance is underwhelming as well. The stock has been flat for the last 12 months while the S&P 500 rose 23%.
VeriSign’s not a bad stock, but it will not help you advance your retirement goals. It gets a “C” rating in the Portfolio Grader.
Juniper Networks (JNPR)
Juniper Networks (NYSE:JNPR) makes and sells routers, switches, network security products and networking technology. The company provides various internet services, including IT networking, cloud services, security, and software.
With that comes a range of cybersecurity services. Juniper provides its Connected Security Distributed Services Architecture platform, including AI-predictive threat prevention.
This is important work, but the company is failing to grow at the rate that investors expect. Revenues for the third quarter were $1.397 billion, down 1% from a year ago.
JNPR stock is down nearly 10% in 2023 and gets a “D” rating in the Portfolio Grader.
NetScout Systems (NTCT)
NetScout Systems (NASDAQ:NTCT) is a Massachusetts-based tech company that provides enterprise solutions, internet networking solutions and security services, including threat detection, forensics and analysis.
The company has more than 3,000 customers in 120 countries.
The stock, however, is down 31% this year, with much of that drop coming on the heels of the company’s fiscal 2024 second-quarter results, which were a major disappointment. Revenue was $196.8 million, down from $228.1 million a year ago.
Much of the drop came from the product side, where revenue of $80.5 million was down from $111.8 million a year ago.
NetScout blamed the downturn on slowing orders because of industry and economic headwinds. It said the problems will likely continue through the second half of the fiscal year.
NTCT stock gets a “D” rating in the Portfolio Grader.
Mitek Systems (MITK)
Mitek Systems (NASDAQ:MITK) is a software company based in California. It uses artificial intelligence to perform tasks related to digital identity verification and mobile image processing.
The company’s platform uses facial biometrics, image capture technology and ID card verification so its customers can bring on new users, verify identities and combat cybercrime.
The company says that its products are used by more than 80 million people to perform such tasks as opening bank accounts and depositing checks into their accounts using a mobile device.
The stock has been up and down all year, dropping as much as 9% and rising as much as 30% recently on the strength of solid 2023 numbers and its 2024 forecast.
MITK stock runs in the middle of the road, but you can do better for a cybersecurity stock. It gets a “C” rating in the Portfolio Grader, making it one of the cybersecurity stocks to sell with confidence.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.