Estimated read time: 3 minutes
Publication date: 27th Mar 2022 18:56 GMT+1
Investing in companies part of a rapidly expanding addressable market is always a good strategy. Ideally, companies in this space should grow revenue and profits at a stellar pace, resulting in outsized gains over time.
One such vertical is cybersecurity, a market that is forecast to forecast to touch $479 billion by 2030, up from $197 billion in 2020, indicating annual growth rates of over 9%.
Here, we look at three stocks part of the cyber security vertical which should be part of your shopping list right now.
Shares of CrowdStrike (NASDAQ: CRWD) are down 24% from all-time highs but have returned 285% to investors since its IPO in mid-2019. The company reported fiscal Q4 of 2022 (ended in January) revenue of $431 million, an increase of 63% year over year. It was higher than estimates of $412 million.
CrowdStrike’s sales for fiscal 2022, stood at $1.45 billion, up from $250 billion in fiscal 2019. Its adjusted earnings per share for Q4 more than doubled year over year to $0.30 and was higher than consensus estimates of $0.20 per share.
CrowdStrike ended fiscal 2022 with more than 16,000 customers compared to just 435 customers in fiscal 2017. Further, these customers continue to increase spending on the CrowdStrike platform.
Analysts expect CRWD stock to increase sales by 48.3% to $2.15 billion in fiscal 2023 and by 35% to $2.91 billion in fiscal 2024. Comparatively, its adjusted earnings might increase at an annual rate of 66% in the next five years.
We can see that CRWD stock is valued at a forward price to sales multiple of 18x and a price to earnings multiple of 205x which is extremely steep.
Shares of Palantir (NYSE: PLTR) are trading 65% below all-time highs, valuing the company at a market cap of $27 billion. A data analytics software company, Palantir, develops software applications that are used by both government and private-sector customers.
Its applications enable clients to integrate and analyze data, allowing them to find trends, accelerate the decision-making process and even optimize operations.
Palantir grew sales by 41% year over year to $1.5 billion in 2021. Its free cash flow surged to $424 million in 2021, up from a negative $271 million in 2020. The company’s revenue derived from commercial customers in the U.S. more than doubled last year and accounts for 13% of total sales.
Palantir’s management expects sales to rise by at least 30% annually through 2025, which suggests revenue will touch $4.3 billion, by the end of the forecast period.
Palo Alto Networks
The final company on my list is Palo Alto Networks (NYSE: PANW) which is one of the few stocks trading at record highs. PANW stock has returned over 450% in the last five years, easily crushing the broader markets.
Similar to other companies mentioned here, Palo Alto Networks has seen significant adoption of its platform. Its revenue has risen by over 100% since fiscal 2018 and was up 30% in its most recent quarter.
Valued at a market cap of $61 billion, PANW reported sales of $4.85 billion in the last 12-months. Analysts tracking PANW stock expect sales to rise by 28.2% to $5.5 billion in fiscal 2022 (ending in July) and by 22% to $6.66 billion in fiscal 2023. Comparatively, earnings are forecast to rise at an annual rate of 26% in the next five years.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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