As organizations’ dependence on virtual work environments grows, as does their adoption of cloud-based platforms as part of their digital transformation, the need to protect sensitive data and prevent cyberattacks has become extremely important. According to the World Economic Forum’s Global Risks Report 2021, cyber risks continue to rank high on the world’s list of threats.
Therefore, several organizations are increasing their cybersecurity spending. Global cybersecurity cumulative spending is expected to exceed $1.75 trillion by for the five-year period 2021 -2025. The cybersecurity market is expected to reach $199.9 billion by 2028, registering a CAGR of 10.5%.
Given this backdrop, we think it could be wise to bet on cybersecurity stocks Check Point Software Technologies Ltd. (CHKP), Trend Micro Incorporated (TMICY), and Radware Ltd. (RDWR), which possess strong growth prospects.
Click here to checkout our Cybersecurity Industry Report for 2021
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP is a global provider of cyber security solutions to governments and corporate enterprises. The company protects its customers from 5th generation cyber-attacks with a catch rate of malware, ransomware, and other attacks. CHKP also offers a multilevel security architecture to defend enterprises’ cloud, network, and mobile device-held information.
This month, CHKP launched Check Point Mind, a knowledge training portal, in collaboration with more than 200 training partners. Through it, Check Point Mind customers, including cybersecurity professionals, can access knowledge and develop skills on cybersecurity.
CHKP’s total revenues increased 4.9% year-over-year to $534 million in the third quarter, ended September 30, 2021. The company’s operating income came in at $261.3 million. Its net income amounted to $219.8 million. Also, the company’s EPS grew 0.6% from the year-ago value to $1.65.
Analysts expect CHKP’s revenue for the fiscal year 2021 to increase 4.3% year-over-year to $2.15 billion. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is estimated to grow 5.8% next year.
CHKP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Quality, and a B grade for Value. We have also graded CHKP for Stability, Sentiment, Momentum, and Growth. Click here to access all CHKP’s ratings.
CHKP is ranked #4 of 27 stocks in the Software - Security industry.
Trend Micro Incorporated (TMICY)
Headquartered in Tokyo, Japan, TMICY develops and sells security-related software for computers. The company’s products include personal computer (PC) client products, local area network (LAN) server products, integrated products, and others. TMICY also offers hybrid cloud security solutions and network security solutions, including intrusion prevention and threat protection solutions.
In August, TMICY launched its Cloud One regional data center in India to uphold data sovereignty and safeguard data privacy in the country. Through this data center, TMICY should be able to help India, a significant market for the company, adopt cloud security services and strengthen its position in India.
For the nine months ended September 30, 2021, TMICY’s net sales increased 9.6% year-over-year to ¥139.18 billion ($1.23 billion). The company’s gross profit grew 10.6% from the year-ago value to ¥108.49 billion ($956.3 million). Its net income rose 35.1% from the prior-year quarter to ¥25.06 billion ($220.93 million). Also, at the end of the period, the company’s cash and cash equivalents increased 30.5% year-over-year to ¥204.73 billion ($1.8 billion).
TMICY’s $1.63 billion consensus revenue for the fiscal period ending December 2021 represents a 140.1% increase year-over-year. Its EPS is expected to increase at the rate of 16.3% per annum over the next five years. The stock has surged 10.8% in price over the past six months and 18.7% over the past nine months.
TMICY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Stability and Quality, and a B grade for Value.
In addition to the POWR Rating grades I’ve just highlighted, one can see TMICY’s ratings for Growth, Sentiment, and Momentum here. The stock is ranked #2 in the Software - Security industry industry.
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR is a global provider of cyber security and application delivery solutions for physical, cloud, and software-defined data centers. The company's solutions consist of Distributed Denial of Service protection, Web application firewall (WAF), and Application Delivery Controllers (ADC) technologies to provide cyber-attack mitigation solutions for various applications.
This month, RDWR introduced Series II of its 2021 Hacker’s Almanac. This three-part series is an info security field guide for security and IT professionals and executive decision-makers responsible for safeguarding their organizations. Through this new series, the organizations should be able to prepare themselves to detect, isolate, deceive, and evict threat actors who might be targeting those organizations.
RDWR’s revenues increased 17.4% year-over-year to $73.42 million in the third quarter, ended September 30, 2021. The company’s gross profit grew 18.2% from its year-ago value to $60.12 million. Its operating income rose 199.8% from the prior-year quarter to $5.87 million. Also, the company’s net income increased 38.4% year-over-year to $4.97 million.
Analysts expect RDWR’s revenue for its fiscal year 2022 to be $308.81 million, representing 8.3% growth year-over-year. The company has surpassed the consensus EPS in three of the trailing four quarters. Its EPS is expected to grow 7.4% next year. The stock has soared 12.7% in price over the past nine months and 13.8% over the past year.
It is no surprise that RDWR has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth and Quality.
Click here to see the additional POWR Ratings for RDWR (Momentum, Sentiment, Value, and Stability). RDWR is ranked #1 in the Software - Security industry.
Click here to checkout our Cybersecurity Industry Report for 2021
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CHKP shares were trading at $110.27 per share on Monday morning, down $0.05 (-0.05%). Year-to-date, CHKP has declined -17.03%, versus a 24.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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