Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

2 Cybersecurity Stocks To Buy On The Dip As Sector Sell-Off Continues

By Jesse Cohen/Investing.comStock MarketsMar 31, 2021 05:05AM ET
www.investing.com/analysis/2-cybersecurity-stocks-to-buy-on-the-dip-as-sector-selloff-continues-200570471
2 Cybersecurity Stocks To Buy On The Dip As Sector Sell-Off Continues
By Jesse Cohen/Investing.com   |  Mar 31, 2021 05:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Cybersecurity stocks started the year strong before a general sell-off in tech shares battered the sector's main ETFs—First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) and ETFMG Prime Cyber Security ETF (NYSE:HACK)—leaving them 12% and 16%, respectively, below their all-time highs.

CYBER:HACK:SPX Daily Chart
CYBER:HACK:SPX Daily Chart

Despite the recent pullback, there are more than a few attractive names in the group enjoying accelerated earnings and revenue growth thanks to booming demand for cloud-based security solutions.

Here are two to consider amid the ongoing sector sell-off.

1. CrowdStrike

  • Percentage Below ATH: 30.1%

Crowdstrike Holdings' (NASDAQ:CRWD) stock has had a remarkable run over the last 12 months. At one point, shares of the Sunnyvale, California-based cybersecurity specialist rose almost 700% off a 52-week low of $31.95 set last March. Its ascent has slowed down in recent weeks though—it is down nearly 20% this year.

CRWD ended Tuesday’s session at $175.10, roughly 30% below its all-time high of $250.42 touched on Feb. 16, giving the fast-growing tech company a market cap of $39.2 billion.

We believe the recent sell-off offers a nice entry point, considering the strong demand the endpoint security leader has seen for its Falcon cloud-based cybersecurity platform.

CrowdStrike, which counts nearly half of the Fortune 100 companies as clients, said it had a total of 9,896 customers as of the end of its most recent quarter, up 82% from the year-ago period.

CrowdStrike Daily Stock Chart
CrowdStrike Daily Stock Chart

CrowdStrike reported a massive beat on earnings and revenue when it released fiscal fourth quarter financial results in mid-March, benefitting from increased enterprise cybersecurity spending.

Revenue in the three-months ended Jan. 31, 2021 grew 74% year-over-year to $264.9 million, easily beating expectations for sales of $250.5 million. Even more impressive, CrowdStrike said annual recurring revenue (ARR) surged 75% from the year-ago period to top the $1 billion mark for the first time ever.

CEO George Kurtz stated on the earnings call that this makes CrowdStrike:

"the third-fastest cloud-native software-as-a-service (SaaS) company reported to reach $1 billion in ARR following fellow pioneers Salesforce.com (NYSE:CRM) and Zoom Video Communications (NASDAQ:ZM)."

Looking ahead, CrowdStrike’s guidance for its fiscal first quarter made clear that the cybersecurity firm does not expect any slowdown in the coming months, with revenue forecast to grow by 62% in the next quarter to $289.1 million.

2. Zscaler

  • Percentage Below ATH: 27.7%

Zscaler Inc. (NASDAQ:ZS) 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 transitioned into one of the leading go-to names in the cybersecurity space thanks to its Zero Trust Exchange platform, which lets organizations provide secure access to internal applications and services from remote locations.

After enjoying year-to-date gains of as much as 270% through early February, Zscaler stock has endured some turbulence lately as the recent sector-wide sell-off took some wind out of the high-flyer’s sails.

Zscaler Chart
Zscaler Chart

ZS shares—which closed at $165.89 yesterday—are now about 28% below their record high of $229.64 reached on Feb. 16, even though the information security specialist reported second quarter earnings which blew past consensus estimates last month.

The solid results were driven by rapid growth in revenue and calculated billings—a key sales metric—which grew 55% and 71%, respectively, from the same period a year earlier.

The cybersecurity firm’s third quarter sales guidance also came in above expectations, with revenue forecast to total $163 million. If confirmed, it would mark a year-over-year growth rate of 47.5%.

The company announced in its fiscal Q2 earnings that it had more than 5,000 customers, including more than 150 customers from Fortune 500 companies.

Despite the recent pullback, Zscaler, which has a market cap of $22.9 billion, still looks like a good bet going forward, considering the ongoing surge in demand for cloud security.

2 Cybersecurity Stocks To Buy On The Dip As Sector Sell-Off Continues
 

Related Articles

Jani Ziedins
Another Profitable Mistake By Jani Ziedins - May 19, 2022 3

The S&P 500 crashed 4% Wednesday in the biggest loss since 2020. The weekly losses were partially offset by Tuesday’s nice 2% pop, but no matter how we try to rationalize it, -4%...

2 Cybersecurity Stocks To Buy On The Dip As Sector Sell-Off Continues

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (9)
FATME sahraie
FATME sahraie Apr 02, 2021 3:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hi,dear how to get money
Billy Bilnaad
Billy Bilnaad Mar 31, 2021 11:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Better buy Cloudflare
cosa mcgosa
cosa mcgosa Mar 31, 2021 11:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
With CRWD trading at over 45X sales is compared to FEYE at 4.5x or BB at 5.5x it's pretty obviously one of the larger bubbles in this market. How many decades will it take to grow into those numbers?
cosa mcgosa
cosa mcgosa Mar 31, 2021 11:16AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
CRWD trading at over 45X sales is one of the more obvious bubbles in this market. compare to FEYE at 4.5x or BB at 5.5x it feels reckless to recommend. how many decades will it take to grow into those numbers???
Adrian Pollner
Adrian Pollner Mar 31, 2021 11:03AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
BB if you are looking for an actually undervalued oppty.
Camilo Balaguera
Camilo Balaguera Mar 31, 2021 10:45AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what about the p/e and p/s??? risky companies in my opinion..
Camilo Balaguera
Camilo Balaguera Mar 31, 2021 10:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what about the p/e and p/s??? risky companies in my opinion..
Brad Smith
Brad Smith Mar 31, 2021 9:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jesse, thanks for your look into these cybersecurity picks. CRWD's balance sheet looks solid and the sell off does seem to be overdone. I'll have to keep my eye on this one.
Amir Alvi
Amir Alvi Mar 31, 2021 9:12AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Very informative and very good analysis. 👍
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email