While nothing can be taken for granted in the capital market, the concept of the top cybersecurity stocks to buy practically sells itself. Fundamentally, the pace of connectivity is only increasing. And though most of the endeavors online focus on productive pursuits, there will always be nefarious actors.
According to information compiled by Cybercrime Magazine, digital breaches of all varieties will cost the globe $10.5 trillion annually by 2025. Indeed, some experts have warned that such a vulnerability represents the greatest transfer of economic wealth in history. Worse yet, it’s not just empty doom-and-gloom speculation.
Recently, consumer goods giant Clorox (NYSE:CLX) revealed the extent of the damage it suffered from a cyberattack earlier this year. Unfortunately, the breach caused widescale disruption to Clorox’s operations, leading to a sharp exit among investors.
Essentially, it’s no time for enterprises to go cheap on their digital protection. And on that note, below are the top cybersecurity stocks to buy.
Palo Alto Networks (PANW)
Pioneering the concept of next-generation firewalls, Palo Alto Networks (NASDAQ:PANW) easily ranks among the top cybersecurity stocks to buy. In particular, these advanced firewalls inspect the content of incoming traffic and identify the applications being used. Therefore, the company is able to enforce protective policies based on applications rather than merely ports or IP addresses, which can be spoofed.
Not surprisingly, PANW is a favorite among cybersecurity stocks. Since the beginning of the year, shares swung up nearly 89%. To be fair, the skyrocketing in 2023 has come at a cost. Right now, shares trade at 207.56X trailing earnings, considerably more than the underlying software industry (at 26.23x).
Still, the demand profile for Palo Alto will probably steadily increase. Notably, its three-year revenue growth rate comes in at 19.8%, above 73% of its peers. Analysts rate PANW a consensus strong buy with a $279.94 price target, implying over 7% upside potential.
While not ranking among the top cybersecurity stocks from a traditional perspective, Datadog (NASDAQ:DDOG) provides critical observability services for modern cloud environments. With the cloud computing sector in the U.S. projected to reach $458.45 billion by 2032 according to Precedence Research, DDOG symbolizes one of the most relevant investments.
Moreover, as the company’s website states, Datadog primarily specializes in real-time monitoring and alerts. This coverage not only includes system performances but also tracks anomalies and potential security breaches. Given that quick detection of problems can help identify and mitigate issues before they become full-blown crises, it’s no wonder that DDOG jumped nearly 30% in the trailing six months.
To be fair, investors who jump aboard Datadog now will be doing so at a premium. Currently, shares trade with forward earnings multiple of 55.85x, ranked worse than 83% of the sector. However, for that valuation, you also get an impressive three-year revenue growth rate of 27%.
Lastly, analysts peg DDOG as a moderate buy with a $107.88 target, implying over 19% growth.
Headquartered in Sunnyvale, California, Fortinet (NASDAQ:FTNT) develops and sells security solutions like firewalls, endpoint security, and intrusion detection systems. Specifically, the company’s flagship offering is the Fortinet Security Fabric, a holistic approach that connects various security solutions into a single integrated platform. Under this umbrella, the technology specialist is able to offer unified visibility and automated protection for an enterprise client’s entire digital infrastructure.
Easily one of the most relevant cybersecurity stocks to buy, FTNT gained nearly 22% since the start of the year. Nevertheless, it’s arguably running a discount. In early August, management disclosed its results for the second quarter, which were mixed. Worse yet, the company lowered its outlook for the year. However, as cyber threats continue to rise in scope and scale, this pessimistic framework may shift positively.
As with the other market ideas, FTNT trading at 44.5x trailing earnings isn’t cheap. However, it also sports a robust three-year revenue growth rate of 30.4%, above 84.5% of its rivals. Finally, analysts rate FTNT a strong buy with a $75.77 target, implying over 28% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.