Wall Street Favorites: 3 Cybersecurity Stocks With Strong Buy Ratings for April 2024

Stocks to buy

As the threat of cybercrime grows, the damage it causes may become more expensive. The demand for effective cybersecurity will increase accordingly. Some businesses and large corporations are slow to spend money on the latest cybersecurity solutions. However, it is almost certain that every company will have to bite the bullet in the coming years.

In this window of opportunity lives the best cybersecurity stocks available right now. These three stocks have the most potential to assert themselves at the top of a growing demand for their solutions. Investors should consider taking a good look at cybersecurity stocks sooner rather than later.

Let’s learn more about the financial standings, latest innovations and exciting valuations that set these three above their peers.

Zscaler (ZS)

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Founded in 2007, Zscaler (NASDAQ:ZS) had an immaculate performance last year. Consequently, it saw a massive jump in price due to its impressive revenue and EPS growth. Zscaler reported revenue growth of 48% and tacked on an extra 100 million dollars in cash flows from operations compared to 2022.

Already, ZS is starting 2024 with a similar revenue trajectory as it continues to reduce operational costs. While cybersecurity faces slower growth, Zscaler stands out with an optimistic outlook.

Further, Zscaler reports an outlook of continued year-over-year (YOY) revenue buildup and a hopeful non-GAAP net income per share of $2.73 to $2.77. Despite high-cost research and development to adopt new zero-trust solutions, Zscaler expects a growing operating margin and better returns this year.

Thus, the company is slowly but surely reaching the GAAP profitable threshold. And, it continues to increase cash flow to fund its growing customer network and offerings.

Tenable Holdings (TENB)

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Tenable Holdings (NASDAQ:TENB) has a firm hold over the vulnerability detection and management software market. One of its most profitable and popular solutions is Nessus, a vulnerability management tool

However, TENB offers other successful tools, such as its universal cybersecurity platform, Tenable One. Recently, Tenable Holdings has asserted itself as a provider of cutting-edge solutions It is implementing a Generative AI plugin for Tenable One, ExposureAI.

The plugin enhances businesses’ access to, understanding of and ease of use of their cyber security network. Tenable Holdings reported that companies are spending significantly more to adopt Tenable One and utilize this state-of-the-art platform. Last year, the company added 156 net new six-figure customers in Q4.

Despite record revenue and continued growth last year, Tenable trades at a low price according to cybersecurity stocks’ standards. Therefore, investors looking for great value and even better returns this year should look no further.

Palo Alto Networks (PANW)

Source: Sundry Photography / Shutterstock.com

Recently, Palo Alto Networks (NASDAQ:PANW) is holding the spotlight for good and bad reasons. The stock saw some volatility after its recent earnings report. Also, it’s garnered attention following the announcement of its new hyper-aggressive strategy to reclaim market share.

Palo Alto has a long history in cybersecurity and has been at the top of investor lists for many years. Despite the stock preexisting newest cloud technology, the company is a leading provider of cloud-software-based cybersecurity through its Secure Access Service Edge (SASE).

Now, the stock is on a dip following CEO Nikesh Arora’s announcement of the company’s 2024 strategy. This included a short-term revenue growth drop. Despite its current slump, Palo Alto trades at a high forward P/E ratio of nearly 43.48

Further, the price remains high due to the company’s proven capability to increase its value. While this stock may be volatile now, its resilience and standing in cybersecurity are undeniable, making it a solid choice.

On the date of publication, Joel Lim 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.

Joel Lim is a finance freelance writer who writes content for several companies like LTSE and Realtor, along with financial publications, including Mises Institute and Foundation for Economic Education.

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