Cybersecurity stocks got off to a strong start to the year before a general sell-off of tech stocks became the industry's main ETFs – First Trust NASDAQ Cybersecurity ETF (NASDAQ 🙂 and ETFMG Prime Cyber ??Security ETF (NYSE 🙂 – left over – putting them 12% and 16%, respectively, below their all-time high.
CYBER: HACK: SPX Daily Chart
Despite the recent downturn, there are more than a few attractive names in the group benefiting from accelerated profit and revenue growth due to the booming demand for cloud-based security solutions.
Here are two to consider amid the ongoing industry sell-off.
1. CrowdStrike
Percentage under ATH: 30.1%
The stock of Crowdstrike Holdings (NASDAQ 🙂 has seen a remarkable increase in the last 12 months. At one point, shares of the Sunnyvale, California-based cybersecurity specialist rallied nearly 700% from a 52-week low of $ 31.95 set last March. However, the rise has slowed in recent weeks: it is down nearly 20% this year.
CRWD ended Tuesday's session at $ 175.10, about 30% below its all-time high of $ 250.42 reached on February 16, giving the fast-growing technology company a market cap of $ 39.2 billion.
We believe the recent sell-off offers a good entry point, given the high demand the endpoint security leader has seen for its cloud-based cybersecurity platform Falcon.
CrowdStrike, which counts nearly half of Fortune 100 companies as customers, said it had a total of 9,896 customers at the end of the most recent quarter, 82% more than the same period last year.
] CrowdStrike Daily Stock Chart
CrowdStrike reported a massive setback and revenue when it released its fourth quarter financial results in mid-March and took advantage of increased cybersecurity spending.
Revenue for the three months ended January 31, 2021 grew 74% year-over-year to $ 264.9 million, easily exceeding expectations for $ 250.5 million revenue. More impressively, CrowdStrike said annual recurring revenues (ARR) are up 75% from the same period last year and topped $ 1 billion for the first time ever.
CEO George Kurtz stated on the earnings call that CrowdStrike:
"The third fastest cloud-native software-as-a-service (SaaS) company reported reaching $ 1 billion in ARR after fellow pioneers Salesforce.com (NYSE 🙂 and Zoom Video Communications (NASDAQ: NASDAQ: ). "
Looking ahead, CrowdStrike & # 39; s fiscal first quarter outlook made it clear that the cybersecurity company expects no slowdown in the coming months, with expected sales growth of 62% in the following quarter to $ 289.1 million.
] 2. Zscaler
Percentage under ATH: 27.7%
Zscaler Inc. (NASDAQ 🙂 is the world's largest provider of cloud-based web security gateways that inspect customers' data traffic for various cyber threats and malware.
The San Jose, California-based company has quickly become one of the leading names in cybersecurity thanks to the Zero Trust Exchange platform, which enables organizations to provide secure access to internal applications and services from remote locations.
After hitting a staggering 270% gains through early February so far, Zscaler stock has been weathering some turbulence recently as the recent industry-wide sell-off has taken some wind out of the sails of the high-flyer.
]
ZS shares – which closed at $ 165.89 yesterday – are now about 28% below their all-time high of $ 229.64, reached on Feb. 16, although the information security specialist reported a second quarter that outperformed consensus estimates last month .
The solid results were driven by rapid revenue growth and calculated invoices – a key sales measure – growing 55% and 71% respectively from the same period a year earlier.
The cybersecurity firm's sales advisories in the third quarter also exceeded expectations, with expected revenues of $ 163 million. If confirmed, it would mean 47.5% annual growth.
The company announced in its fiscal profit in the second quarter that it had more than 5,000 customers, including more than 150 customers of Fortune 500 companies.
Despite the recent downturn, Zscaler, with a market cap of $ 22.9 billion, still seems like a good bet for the future, given the continued rise in demand for cloud security.
