If you’ve ever been on the internet - which you probably have if you’re reading this - then you’ve most likely had a brush with cybercriminals at some point. These days anyone with an email address will have received at least one malicious email from some manner of opportunistic fraudster.
Whether they're pretending to be your bank, an old friend, the Crown Prince of some far off land or a retailer of dubious sounding medications, all the people sending these emails want to steal your bank account details or your identity.
Protection from these virtual villains is a big business and there are a wealth of cybersecurity stocks that investors can snap up. What’s more, they’re looking like a fantastic investment as we head into the New Year.
Why are cybersecurity stocks a good opportunity?
In short, cybersecurity is booming as cybercrime becomes increasingly rife and sophisticated. Our world is becoming more and more digitised by the day, and so are our criminals.
Grand View Research estimated that the global cybersecurity market’s value was $167.13bn in 2020, with revenue expected to hit $372.04bn in 2028.
It’s just as well the industry is growing. For one thing, it needs to keep pace with the growing menace of cybercrime.
There are sinister online threats that all of us can face, with the FBI’s annual internet crime report stating that it had received nearly 2,500 ransomware complaints in 2020, up about 20% from the year before.
However, companies are also experiencing increased exposure to cybercrime. For example, the same report noted an increase in business email compromise cases, adding that these would often lead to identity theft being used to steal funds and convert them into cryptocurrency.
A separate report from cybersecurity firm Beyond Identity found that institutions and individuals lost over $1trn from cybercrime in 2020, with this figure having doubled from 2018. Clearly, cybercrime has become a massive issue. But this has created a great opportunity for cybersecurity firms to grow, as companies need more and more protection against hackers and fraudsters.
Cybersecurity stocks to watch
SentinelOne (NYSE: S)
This California-based firm caused a stir with its IPO in June of 2021. SentinelOne’s shares finished their first day of trading up by 21%, giving it a market capitalization of more than $10bn.
Investors were attracted by the company’s fantastic annual revenue growth of 108%.
Additionally, the firm has garnered a strong reputation for excellent security technology after its customers were protected from the infamous SolarWinds hack, which affected major companies like Cisco (NASDAQ: CSCO) and Intel (NASDAQ: INTC), as well as the US government.
Since becoming publicly traded, SentinelOne’s share price has increased by around 18%, sitting at $50.30 at the time of writing. Additionally, analyst consensus rates the stock as a Buy.
Crowdstrike (NASDAQ: CRWD)
This firm is a cloud-based security outfit, which provides threat intelligence, endpoint security and cyberattack response services.
Revenues are growing well, with its latest earnings showing 70% year-on-year growth to $337.7m, while the company has also secured some high-profile customers such as Goldman Sachs and Sony.
With easy deployment and strong demand, many investors are optimistic that Crowdstrike can continue its impressive growth over the long term.
2021 saw the company’s share price drop by 0.71% to $210.31 at the time of writing, though it reached a peak of around $295 in early November. So, right now the stock looks to be in a bit of a dip, but that might be a great opportunity to invest at a low price.
Largely, analysts rate the stock as a Strong Buy.
Cybersecurity IPOs in 2022
With the current environment so well-suited to cybersecurity firms achieving solid growth, don’t be surprised if we see some more exciting companies going public over the next 12 months.
Of course, we don’t know yet whether firms will decide to list, but here are a couple of up and comers to keep an eye on in the year ahead:
Netskope: This security platform provider raised $300m in July 2021, which valued it at around $7.5bn. The company has remained quiet about the possibility of going public, but some analysts have speculated that an IPO could be on the table in 2022.
Cybereason: In November, this cybersecurity startup’s CEO said an IPO was the business’ “next step”. The firm, which uses AI technology in its platform, raised $275m in the summer, which valued it at between $3.1bn and $3.3bn.