The booming cybersecurity industry promises many more years of growth as more corporations digitalize and require their systems to be kept secure.
Growth stocks can help increase the value of your investment portfolio to achieve a comfortable retirement. However, you should be discerning in picking the right stocks to own for the long term. Some companies may falter and fall by the wayside while others may see their growth fizzle out after a while.
Because of these risks, it makes sense to look for stocks that are riding sustainable trends that can provide growth tailwinds for years or even decades. Cybersecurity is one of the sectors exhibiting strong demand and can allow the players within it to enjoy steady, long-term growth.
With more corporations moving to cloud platforms amid a wave of digitalization, cybersecurity is more imperative than ever for these businesses to ensure that their sensitive data is well protected. Here are three promising cybersecurity stocks that you can safely buy and own for the next decade.
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CyberArk Software
CyberArk Software (CYBR -2.06%) is an identity management company that provides comprehensive security screening across business applications, cloud platforms, and corporate workspaces.
For 2023, revenue climbed 27.1% year over year to $751.9 million, with gross profit improving by nearly 28% year over year to $595.8 million. Gross margin increased slightly from 78.7% to 79.2%. CyberArk also generated a positive free cash flow of $51.3 million for the year, an increase of 37.8% over the previous year’s $37.2 million.
The momentum has carried over into the first quarter of this year as CyberArk reported a strong set of earnings. Revenue jumped 37% year over year to $221.6 million while gross profit surged 42.5% to $179.1 million, translating into a gross margin of nearly 81%. The identity management firm also churned out a free cash flow of $66.8 million, a sharp increase from the $4 million generated a year ago.
Of the company’s total revenue, 93% was recurring, with recurring revenue increasing by 41% year over year to $206 million. Annual recurring revenue also grew 34% year over year to $811 million.
There could be more growth in store for CyberArk after it announced the acquisition of Venafi for $1.54 billion in cash and stock. Venafi is a leader in machine identity management and through this acquisition, CyberArk’s management hopes to establish a unified platform for enterprise-level machine identity security.
Not only will this transaction immediately add to CyberArk’s margins, but management believes there will be revenue synergies through cross-selling, up-selling, and geographic expansion. The purchase will also increase CyberArk’s total addressable market (TAM) for identity security from the current $50 billion to around $60 billion.
Meanwhile, the company is also embedding artificial intelligence capabilities across its identity security platform. This inclusion will enable customers to gain valuable insights and apply advanced identity threat detection to cut response times. With CyberArk’s software becoming more attractive, this will result in stronger customer loyalty.
Fortinet
Fortinet (FTNT -0.58%) has an integrated portfolio of more than 50 enterprise-grade cybersecurity products. More than half a million customers use the company’s products to secure people, data, and devices.
The company pulled off an impressive performance last year with revenue rising 20.1% year over year to $5.3 billion. Operating income climbed 28% to $1.2 billion with net income increasing by nearly 34% to $1.1 billion. The business also generated a positive free cash flow of $1.7 billion, up nearly 20%.
Fortinet continued performing well in the first quarter of this year. Revenue edged up 7.2% year over year to $1.3 billion while net income rose 20.8% to $299.3 million. The cybersecurity company generated $608.5 million of free cash flow for the quarter.
The company has also done well in returning cash to shareholders via share buybacks, with around $5.3 billion purchased since 2020, resulting in an 11.4% reduction in shares outstanding.
Fortinet has also incorporated generative artificial intelligence capabilities to allow for natural language processing functionality, allowing customers to boost their operating efficiency and simplifying the user interface.
Management has identified a TAM of $144 billion in 2024 that is set to grow to $222 billion in four years, providing ample opportunities for Fortinet to grow further.
CrowdStrike
CrowdStrike (CRWD 2.69%) operates the CrowdStrike Falcon platform, which helps clients detect threats and protect data, providing them with protection and better performance.
The company has demonstrated robust growth with a 36.3% year-over-year increase in revenue to $3.1 billion for its fiscal 2024, ended Jan. 31. The business generated a net income of $89.2 million for the fiscal year, reversing the $183.2 million loss in the prior year. Free cash flow also improved by nearly 40% year over year to $940.2 million.
The first quarter of fiscal 2025 saw a similarly strong performance with CrowdStrike registering a 33% year-over-year increase in revenue to $921 million. Higher interest income and gains from investments propelled the company’s net income to $42.8 million, significantly above the $491,000 reported in the preceding year. Free cash flow came in strong at $323.1 million, up nearly 42%.
CrowdStrike is tapping into partnerships to fuel further growth. The company announced an expanded distribution agreement with Ignition Technology to deliver its cybersecurity platform to the latter’s Nordic partner base. Together, both parties will identify threats and help organizations to stop breaches.
The company also inked a partnership with Google Cloud to transform artificial intelligence-native cybersecurity, working together to stop cloud intrusions and keep sensitive data secure.
Management has reported a TAM of $100 billion for 2024, which includes managed services, endpoint security, and threat intelligence, among other aspects. This TAM is expected to grow to $225 billion by 2028, allowing the Falcon platform to spread its wings and propel CrowdStrike’s revenue and earnings higher in the years to come.