In an increasingly tech-focused world, cybersecurity is of paramount importance to businesses. As a result, cybersecurity stocks are one of the more lucrative investments in the stock market today. A lot of the hype surrounding the sector is due to the high-profile cybersecurity attacks in the past few years. The most recent one on the Colonial Pipeline forced all operations to a halt, impacting nearly 50% of the East Coast’s fuel supply.
Businesses are wary of the threats posed by the digital world, especially after the paradigm shift brought by the pandemic. According to Quince Market Insights, The global cybersecurity market was estimated at $162.5 billion last year and should rise to $418.3 billion by 2028.
With the number of cybersecurity threats increasing globally, cybersecurity companies have had to evolve as well. To stay abreast with the latest trends in the sector, they need to continue investing in improving their services. With that being said, let’s have a look at three high-flying cybersecurity stocks with an incredible growth runway ahead.
- CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
- Docusign (NASDAQ:DOCU)
- Cloudflare (NYSE:NET)
Cybersecurity Stocks: CrowdStrike Holdings, Inc. (CRWD)
CrowdStrike provides cloud-based solutions for endpoint and cloud workload protection. It provides its services via a highly successful subscription business model, which saw an 82% year-over-year growth in customers in the fiscal year 2021. Its 5-year revenue growth has averaged at over 100%, which dwarfs the industry averages. Moreover, CRWD stock has had an incredible run in the market, registering more than 130% growth in the past 12 months.
The company operates a SaaS model in expanding its revenue base. 92% of its revenues are subscription-based, and despite its customer count, it is a relatively small company with a massive growth runway. The company scaled its revenues to $1 billion for the first time in fiscal 2021.
Moreover, it expects to grow its revenues to grow $3 billion by fiscal 2025, implying a cumulative growth rate of roughly 30%. Though the stock is expensive, it is well worth the price at this time.
Cybersecurity Stocks: DocuSign (DOCU)
DocuSign is an industry leader in cloud-based e-signature solutions. It effectively automates agreement processes to save costs for businesses. Its core product offering enables users to sign contracts electronically, streamlining different kinds of contract work. In the past four quarters, the firm has generated roughly $1.45 billion in revenues, which is a testament to its utility during the pandemic.
DOCU stock had a stellar 2020 as more workflow processes shifted online. The pandemic was a major catalyst in pushing for the platform’s adoption. As a result, the e-signature market is growing at an amazing 20% annually, and the company estimates a total addressable market of $25 billion.
The great thing for the company is that 95% of its revenues are subscription-based, which were greatly accelerated by the pandemic.
Cloudflare operates a robust cloud platform that enables it to provide various network services to its users. The company has been growing at a frenetic pace and has expanded its total addressable market to $72 billion, a 125% increment since its IPO in 2019. Moreover, it is expanding into other services in addition to its traditional content delivery.
Cloudflare has multiple catalysts which will continue to drive growth for the foreseeable future. Firstly, it plans to expand into adjacent areas, including cybersecurity, MPLS/SD-WAN, and other high-margin services. The goal is to become a one-shop stop for all security and networking services for its customers. Moreover, it has done exceedingly well in increasing its large customer cohorts and has hired an enterprise sales team to continue going after larger accounts. Hence, NET stock is in a strong position to continue posting healthy gains for its shareholders in the near term.
On the date of publication, Muslim Farooque 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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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