2 Cybersecurity Stocks with Strong Buy Ratings for July 2024

On July 19, a global technology outage caused by an update from cybersecurity company CrowdStrike (NASDAQ: CRWD) caused significant disruption around the world.

The malfunction of CrowdStrike’s Falcon Sensor software caused flight cancellations, disruptions in healthcare, crashed payment systems, and blocked access to Microsoft (NASDAQ: MSFT) services, making it one of the largest IT outages in history.

As a result, CrowdStrike shares plunged 12% in afternoon trading while its rivals gained. That downturn came despite CrowdStrike’s impressive 100% rise over the past year and raised concerns among analysts about the company’s valuation, which was valued at $83.5 billion at Thursday’s close.

Adding to the chaos was another outage in Microsoft’s Azure cloud services, causing a number of other disruptions.

In this context, Finbold analyzed the current trends and tracked down the two best stocks with strong buy recommendations in July to keep an eye on in the coming months.

Palo Alto Networks Inc. stock (NASDAQ: PANW)

Palo Alto Networks Inc. (NASDAQ: PANW), a leading cybersecurity company, offers an attractive investment opportunity due to its solid financial position and operational efficiency.

With a market capitalization of $107.14 billion and an enterprise value of $105.21 billion, Palo Alto Networks has demonstrated consistent growth and resilience. The company has seen a steady increase in revenue, and analysts are forecasting a 20% growth rate going forward. Palo Alto Networks’ earnings are growing rapidly and have recently become profitable on a GAAP basis.

The return on invested capital (ROIC) further underscores the company’s efficient use of financial resources. Palo Alto Networks’ valuation metrics, including a P/E ratio of 57.89 and a price-to-cash flow ratio of 45, are supported by the company’s high profitability and growth potential.

The PEG ratio of 1.12 reflects the company’s ability to maintain high profit margins while expanding its customer base.

Analysts are optimistic about Palo Alto Networks’ future. The average price target for the next 12 months is $342.40, which represents an increase of 3.48% from the current price of $330.89. The highest forecast is $385.00, while the lowest is $275.00.

Palo Alto Networks’ broad portfolio of solutions, including network security, cloud security and security operations, also provides a significant competitive advantage.

Zscaler (NASDAQ: ZS) Stock

Zscaler (NASDAQ: ZS), another leading cybersecurity company, is focused on improving digital transformation through its Zero Trust Exchange platform.

The company has demonstrated impressive financial performance and growth potential, driven by increasing demand for its innovative platform. In the third quarter of fiscal 2024, Zscaler reported a 32.1% year-over-year increase in quarterly revenue, reaching $553.2 million.

This growth was driven by increasing customer demand for the Zero Trust Exchange platform. Adjusted earnings per share for the quarter were $0.88, a year-over-year improvement of 83.3%, significantly exceeding forecasts.

Free cash flow increased to $123.1 million, with a free cash flow margin of 22%. As of April 30, Zscaler’s cash reserves totaled approximately $2.2 billion, underscoring the company’s strong financial health and liquidity.

Zscaler’s valuation metrics, including a P/E ratio of 64.02, reflect a premium valuation justified by the company’s robust growth prospects.

Analysts have set an average 12-month price target of $232.04, representing an increase of 23.07% from the current price of $188.54, with the highest forecast being $290 and the lowest being $180.

Zscaler’s Zero Trust Exchange platform, the world’s leading cloud security solution, protects thousands of customers from cyber threats and data loss. The company’s focus on innovation and expansion to meet growing demand positions it for continued success.

Diploma

Both Palo Alto Networks and Zscaler are well positioned to capitalize on the increasing demand for cybersecurity solutions, making them attractive alternatives to CrowdStrike.

These two companies take a unique approach to the ongoing cybersecurity revolution, making their stocks an attractive choice for investors and giving them a clear advantage over the competition.

However, investors should remain cautious and conduct due diligence given potential market volatility and the ever-evolving cybersecurity threat landscape.

In order to make informed investment decisions, diversification and careful analysis of market conditions are crucial.

Disclaimer: The content of this website does not constitute investment advice. Investments are speculative. When you invest, your capital is at risk.