Cybersecurity will be a vital part of the digital economy moving forward. Businesses are financially incentivized to use the best security tools to protect their data and systems. Did you know that an average hack can cost a company approximately $4.5 million? This is according to an annual study it conducts IBM.
However, older products like antivirus software often don't do this job anymore. This is where next generation solutions come into the picture. Investors have a variety of Cybersecurity stocks to choose from, but after some due diligence, three emerged as potential long-term winners.
Here are three cybersecurity stocks you can buy and hold for the next decade.
1. Palo Alto Networks
Firewalls have been critical to security for years, and this is where they stand Palo Alto Networks (NASDAQ:BANO) specialized. A firewall is like the security detail at a party that checks the guest list to ensure only invited people enter. Firewalls monitor incoming and outgoing network traffic, looking for anything that doesn't belong there. Palo Alto Networks' firewall is top-notch; Third party companies such as GartnerPrestigious Magic quarter The ratings have ranked it as a leader in its category.
Today, Palo Alto Networks has more than 70,000 active customers and is growing by expanding its product offerings to include additional security categories on two other platforms. This gives the company three platforms: network security, cloud security, and security operations. Currently, only half of the company's customers use two of the three platforms, and only 13% use all three, so there are cross-selling opportunities.
Palo Alto is one of the largest security companies, with annual revenues of more than $7.5 billion. Earnings have risen significantly in recent years, and analysts believe earnings will continue to grow, at an annual average of 22% over the next three to five years. The company's large customer base and size give it a strong hand as it competes for customers' security budget dollars over the next decade.
2. CrowdStrike Holdings
Endpoint security is one of the focal points of next-generation solutions CrowdStrike Holdings (NASDAQ:CRWD) He quickly proves that he is a winner in this arena. Endpoint security protects devices on the network (endpoints), such as computers or mobile devices. CrowdStrike uses artificial intelligence (AI) and a cloud platform to provide instant and effective protection against potential threats. The platform learns from threat encounters, which means the product improves as it grows and encounters more threats.
CrowdStrike makes selling its products significantly easier because it sells different products and services as modules. Customers can pick and choose what they want to meet their needs. CrowdStrike has released modules over time as it expands into new categories. Today, 27% of CrowdStrike customers use at least seven modules, and the number of those using at least eight modules has doubled since the end of 2023.
The combination of customer growth and cross-selling has led to tremendous growth; Revenues doubled from $400 million to $3 billion in just four years. The business has also reached a size where earnings start to skyrocket, giving the stock a bright outlook for long-term investors. Analysts believe CrowdStrike's earnings will grow at an annual rate of 22% over the next three to five years.
3. Microsoft
Tech giant Microsoft (NASDAQ:MSFT) It's not the first name you think of when discussing cybersecurity growth stocks. It also doesn't grow as quickly as others on this list. But what Microsoft offers is a much higher ground because it is a highly diversified company with leading businesses in many industries. The Microsoft Defender security product is built into Windows and Office programs.
Are you looking to sleep well at night with your investments? Look no further. Palo Alto Networks and CrowdStrike are drops in the bucket compared to what Microsoft produces each year. The company has a strict balance sheet with a AAA rating, which is only one Two publicly traded companies With such a situation. It's also the only company on this list that pays a dividend, which Microsoft has collected for more than 20 consecutive years.
Microsoft Defender will never be the focal point for shareholders, but that's okay. The stock could give investors exposure to cybersecurity by rewarding enterprise software, cloud, gaming and more. Despite its massive size, Microsoft is still growing. Analysts believe the company will grow earnings 16% annually over the next three to five years, making Microsoft a jack of all trades that investors can confidently hold for the long term.
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Justin Pope He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Microsoft, and Palo Alto Networks. The Motley Fool recommends Gartner and International Business Machines and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
3 cybersecurity stocks you can buy and hold for the next decade Originally published by The Motley Fool