2023 was a record year for ransomware attacks and the threat landscape has worsened this year. Bad actors have laid siege on government and enterprise systems, causing data leakages, financial losses and reputational damage. The only solutions to these threats are products offered by top cybersecurity stocks to buy now.
After a series of high-profile attacks this year, the message is clear: companies and government agencies must prioritize cyber spending. Otherwise, they might face a sophisticated attack like the Change Healthcare attack that took several weeks to clean up.
With Chief Security Information Officers increasing their investments, the best cybersecurity stocks to buy now are poised for a secular bull run. Gartner forecast calls for security and risk management spending to rise 14% in 2024 and McKinsey sees a $2 trillion addressable market.
With threats proliferating, cybersecurity spending will be on an upward trajectory. Moreover, growth in public cloud and remote work only heightens the need for cloud security and identity management tools. Under these conditions, these cybersecurity stocks to buy now will soar.
Okta (OKTA)
One of the most common ways hackers access organization data is by compromising the identity of authorized users. Today, 80% of data breaches involve some form of compromised identity. To quell this threat, companies are seeking the best identity management solutions to fight this menace.
Okta (NASDAQ:OKTA), which provides cyber solutions for user authentication and identity controls, will profit. Today, it is leading the fight against identity attacks. The company offers a unified identity solution that covers access management, privileged access and identity governance. Furthermore, it’s rapidly bringing innovations like Identity Security Posture to market.
Due to its multi-layered approach to identity security, Okta has emerged as one of the top solutions, beating competitors like Microsoft (NASDAQ:MSFT). This market advantage has led to stellar revenue growth. In the latest Q1 fiscal year 2025 report, total revenue increased 19% to $617 million and current remaining performance obligations grew by 15% to $1.9 billion.
For fiscal year 2025, Okta expects to achieve revenues of at least $2.53 billion, representing 12% growth. Still, with an $80 billion market opportunity, the identity management provider has a long growth runway.
Fortinet (FTNT)
Fortinet (NASDAQ:FTNT) is one of the top cybersecurity stocks to buy now, considering the secular tailwinds in cyber and its strong execution record. It’s worth noting that it has grown free cash flow at a 30% compounded annual growth rate (CAGR) over the past 10 years. As a result, the share price has compounded at a similar rate.
That said, it hasn’t been smooth sailing for Fortinet recently. A report by Bleeping Computer revealed that an espionage attack by Chinese hackers on its cybersecurity system, FortiGate, was larger than previously indicated. This news has created an opportunity for long-term investors. At 30 times fiscal year 2025 EPS estimates, Fortinet is among the top cybersecurity stocks to buy now.
In terms of long-term fundamentals, Fortinet is well-positioned in its three growth pillars: network security, Secure Access Service Edge (SASE) and Security Operations. It’s the leader in network security with its firewall products and continues to gain market share. Management expects faster growth than the market’s 10%.
Lastly, SASE will be a major growth engine as Fortinet leverages its 700,000 network security customers and 12 million deployed firewalls. Management plans to leverage this installed base to upsell and cross-sell SASE products.
Palo Alto Networks (PANW)
This cybersecurity giant has been consolidating between $260 and $325 since its Q2 fiscal year 2024 earnings in February. Investors have raised questions about its platformization strategy and its billings. However, Palo Alto Networks (NASDAQ:PANW) remains one of the best cybersecurity stocks to buy now for the secular growth in cyber.
First, let’s address the bearish points. Palo Alto shifted to a platformization strategy to win market share. Although it has offered free use periods as trials, these customers end up signing more than three-year deals. On billings, the metric has slowed due to deferred payments caused by a high interest rate environment rather than lower demand.
On the bullish case, Palo Alto offers one of the best cybersecurity platforms. It enjoys product leadership in 23 categories organized into three platforms – network security, cloud security, and security ops. These platforms are tightly integrated into one solution. About 50% of the top 5,000 customers use two or more platforms, accounting for about 80% of next-generation security annual recurring revenue.
In addition to the best-in-class platform, the company has also improved margins significantly. In Q3 FY 2024, non-GAAP operating margins increased by 200 basis points YOY to 26%. Lastly, management expects at least 16% revenue growth and 38.5% adjusted free cash flow margins in FY2024. Indeed, this is a top cyber play with impressive growth and profitability.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.