Cybercrime is a terrible scourge of humanity. However, the good news is that there are many companies fighting cybercrime with innovative solutions and that there are many opportunities for investment in promising cybersecurity companies. In this article, we will go over some of the most exciting investment opportunities in the cybersecurity industry.
The internet has dramatically expanded the capabilities of humanity. Thanks to the internet, information flows infinitely faster throughout the world, creating opportunities in finance, art, education, research, etc., that simply couldn’t have existed beforehand. In fact, the internet is so useful that over 5 billion people, or roughly 63% of the global human population, use it on a regular basis.
But, despite the fact that the internet is such a blessing for humanity, there are, unfortunately, some people who use the internet nefariously to exploit others by stealing from them, blackmailing them, or otherwise carrying out illegal activities for their own gain.
These people, who are commonly referred to as “hackers,” use a variety of techniques to attack their victims, including:
- Phishing emails
- Ransomware
- Man-in-the-middle attacks
- DDoS attacks
- Cross-site scripting
- DNS poisoning
- Malicious apps
- Unpatched vulnerability exploitation
- ...and more
Cybercrime carried out by hackers is incredibly costly. In fact, it is estimated that by 2025, cybercrime will cost the world $10.5 trillion annually in damages.
Cybercrime is a terrible scourge of humanity. However, the good news is that there are many companies fighting cybercrime with innovative solutions and that there are many opportunities for investment in promising cybersecurity companies. In this article, we will go over some of the most exciting investment opportunities in the cybersecurity industry.
1. CrowdStrike Holdings (CRWD)
CrowdStrike Holdings is a cybersecurity company that provides endpoint security protection for a wide range of devices and equipment, including laptops, servers, PCs, and other devices that might be connected to a network. As a cloud-native software company, CrowdStrike is ideally suited for providing cybersecurity for remote work operations.
The reason why CrowdStrike Holdings has such great potential for growth in the cybersecurity industry is that it has sophisticated and highly advanced security software that uses machine learning to detect and neutralize threats to a network or connected devices. CrowdStrike’s software is also very easy to deploy to remote workers who are spread out around many different areas. This is a key advantage. Additionally, the company has been adding modules to its platform regularly that provide extra assistance for customers. It also has new integration agreements with a variety of other companies in the tech space that will help streamline data protection across an organization’s entire IT infrastructure.
2022 has not been the best year for the CRWD stock. However, the stock has been trending upward over the last few years. Also, its sales have been strong despite the recent dip in price, which is a very positive sign. As the global demand for cybercrime increases in the next few years, CrowdStrike is well-positioned to meet some of this demand and grow steadily as a result.
2. First Trust Nasdaq Cybersecurity ETF (CIBR)
The CIBR ETF is an ETF that represents a collection of some of the top cybersecurity companies on the market. For example, the top holdings of the ETF are Cisco Systems. Inc., Broadcom Inc., and Infosys Limited (ADR). Investing in a cybersecurity ETF such as CIBR helps to reduce risk through diversification.
The cybersecurity industry is growing at a compound annual growth rate of 8.9%. Because many of the companies that are included in this ETF are some of the top brands in the cybersecurity industry, it means that many of them will most likely thrive as the demand for cybersecurity solutions continues to increase over the next few years. This is especially true considering the fact that the COVID-19 pandemic accelerated the switch to remote work.
CIBR has roughly doubled in price over the last 4-5 years, moving from roughly $20 to about $40, even reaching as high as $56 at one point. As far as cybersecurity ETFs go, this is one of the most promising, and it is one that you should strongly consider if you are thinking about investing in cybersecurity.
3. Palo Alto Networks (PANW)
Palo Alto Networks is a global cybersecurity company that has its roots in firewalls, which are devices that protect traffic in and out of offices, data centers, and other physical locations. However, like many other cybersecurity companies, Palo Alto Networks has adapted to cloud technology.
In fact, Palo Alto Networks has acquired more than a dozen smaller cloud-native cybersecurity companies in the past few years. These acquisitions have helped to revamp Palo Alto Networks’ security solutions. Palo Alto Networks is projected to have an annual revenue growth of 20% through 2024, and Bank of America has given the company a “Buy” rating.
PANW has been one of the top performers in the cybersecurity sector for 2022, which has been a difficult year for the stock market. What makes this company an enticing investment is the fact that it has successfully combined its legacy business with newer, more advanced cloud technology. Currently, Palo Alto Networks is one of the largest pure-play cybersecurity operations by revenue and market cap. It also completed a 3-for-1 stock split in September. This is another one to consider allocating capital to.
4. Zscaler (ZS)
Zscaler is a cloud-native security vendor that has been steadily increasing its sales. Like Palo Alto Networks, it is another one of the largest pure-play cybersecurity stocks by overall market cap. This is true even despite the fact that the stock has dropped about 50% in 2022. Zscaler uses a combination of cloud security solutions and endpoint security services to keep data secure.
Although Zscaler is a cybersecurity company, it started out as a software-as-a-service (SaaS) company with products designed specifically for cloud computing protection. However, in recent years, it has bolstered its offerings with a variety of internet security and end-user monitoring products. So, now it is a much more complete and multi-faceted cybersecurity firm that provides many different security solutions.
The fact that Zscaler offers high-quality end-user monitoring services is extremely significant because so many more people are working from home now due to the pandemic. So, having end-user monitoring is now more important for companies than it has ever been to prevent vulnerabilities that can be exploited by hackers. Another important thing to consider is that spending on cloud computing is expected to exceed $1 trillion by the end of 2024. The rapid increase in demand for cloud computing will most likely help to keep Zscaler’s sales strong for the foreseeable future.
5. Akamai (AKAM)
Content delivery networks (CDNs) are another aspect of the cybersecurity landscape that should not be overlooked. Akamai is a content delivery network that makes sure that content and data that is sent from one section of the network arrive safely at their destination. Thanks to streaming services, apps, the metaverse, etc., more content and data is traveling around the world than ever before. Making sure data stays secure is critical for companies that deliver content.
Akamai not only prioritizes speed, but it also has dramatically increased its security offers in order to protect its customers from ransomware attacks. To help with this, Akamai acquired Guardicore and Linode in the past two years.
Essentially, Akamai has become one of the most important and strongest content delivery network companies. We believe that the strength and security of its network will help to fuel sales growth in the next few years as demands for digital content continue to grow. Akamai also is a leading developer of edge computing technology which is used for bringing data away from centralized data centers and closer to the users who will actually use it.
Conclusion
Some investors shy away from the cybersecurity niche either because they find it to be too technically challenging or because they don’t want to be constantly reminded of the dangers that cybercriminals pose. However, cybercrime is not going away anytime soon. But at least there are many promising companies that are helping to fight back against cybercrime and reduce some of the damage that it causes.
In this article, we have gone over some of the most promising cybersecurity companies to invest in and also discussed one of the top cybersecurity ETFs. If you are looking for a way to invest in the cybersecurity industry, then any one of these options can be a great place to start.
Expect to see strong growth of the cybersecurity industry as a whole in the next few years. Companies have increasingly shifted their business models to more digital since the pandemic.
While some companies have switched back, a large percentage of companies have kept significant portions of their operations remote. In fact, 16 percent of U.S. companies are now fully remote, and there are projected to be 36.2 million remote workers in America by 2025.
As companies move more and more of their assets and operations to the cloud and to the digital world, cybersecurity will become increasingly important. That means that now could be the ideal time to invest in promising cybersecurity companies. You can also go with the cybersecurity ETFs if you would like to balance your risk among a number of different companies in the industry.
Here at The Spaventa Group, we help investors get access to such opportunities with our venture capital investment services.
If you are interested in learning more about how you can use our VC investment solutions to invest in promising industry companies that have not gone public yet, then feel free to get in touch with us today.
