It is impossible to imagine a world without the internet in 2022. The pandemic has accelerated the digital dependency across the global population. Moreover, digitization across industries has gained significant momentum over the past two years. According to Statista, till April 2022, there were 5 billion internet users worldwide or 63% of the global population.
Amid the rampant online activity, cyber-attacks have surged. Moreover, data breaches of U.S. government databases have been on the rise, and the Biden administration has been investing heftily to strengthen the cybersecurity infrastructure. Therefore, the demand for cybersecurity services is expected to remain robust.
Furthermore, growing e-commerce platforms and the adoption of core technologies such as the internet of things (IoT), artificial intelligence, and cloud-based solutions are driving the prospects of the cybersecurity market. The global cyber security market is projected to reach $376.32 billion by 2029, exhibiting a CAGR of 13.4%.
Therefore, cybersecurity stocks Radware Ltd. (RDWR), Fortinet, Inc. (FTNT), and Cloudflare, Inc. (NET) are expected to benefit. However, let’s find out which of these stocks could be the best addition to your portfolio now.
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR and its subsidiaries develop, manufacture, and market cyber security and application delivery solutions for applications in the cloud, physical, and software-defined data centers worldwide. The company offers DefensePro, AppWall, Radware Kubernetes WAF, and DefenseFlow.
On July 20, 2022, RDWR launched its Bot Manager with a new set of crypto mitigation algorithms. It aims to prevent sophisticated bots evade traditional CAPTCHA solutions to harm a website or application. Given the rising cybercrimes, this new launch should be widely in demand.
Moreover, on June 1, 2022, RDWR and managed security service provider ONESECURE announced their partnership agreement to expand ONESECURE’s cyber security suite with Radware’s Application Protection-as-a-Service offering and Cloud DDoS Protection Service in. This demonstrates RDWR’s solid positioning in this space.
For the first quarter that ended March 31, 2022, RDWR’s revenues increased 10.4% year-over-year to $73.71 million. Its non-GAAP net income came in at $8.84 million, up 10.2% year-over-year, while its non-GAAP EPS came in at $0.19, up 11.8% year-over-year.
RDWR’s revenue is expected to increase 9.6% year-over-year to $341.54 million in 2023. Its EPS is estimated to grow 16.2% year-over-year to $0.93 in 2023. Also, it surpassed EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 3% to close the last trading session at $22.40.
RDWR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
RDWR has a B grade for Growth, Sentiment, and Quality. It is ranked first among 29 stocks in the Software - Security industry. Click here for the additional POWR Ratings for Value, Momentum, and Stability for RDWR.
Fortinet, Inc. (FTNT)
FTNT provides broad, integrated, and automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers FortiGate hardware and software licenses that provide various security and networking functions.
FTNT’s total revenue increased 34.4% year-over-year to $954.80 million for its first quarter ended March 31, 2022. Its net income came in at $138.40 million, up 29.1% year-over-year, while its EPS came in at $0.84, up 31.3% year-over-year. However, its cash and cash equivalents came in at $923.50 million, down 50.4% year-over-year.
The stock has lost 17.6% year-to-date to close the last trading session at $59.20.
FTNT's overall C rating translates to a Neutral in our proprietary rating system. It has an A grade for Quality and a B grade for Sentiment.
Within the Software - Security industry, FTNT is ranked #7. Click here for the additional POWR Ratings for Growth, Value, Momentum, and Stability for FTNT.
Cloudflare, Inc. (NET)
NET operates as a cloud services provider that delivers a range of services to businesses worldwide. The company offers an integrated cloud-based security solution to secure various platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices.
NET’s revenue came in at $212.17 million for the first quarter ended March 31, 2022, up 53.7% year-over-year. However, its net loss increased 3.5% year-over-year to $41.38 million, while its loss per share remained at $0.13. In addition, its cash, cash equivalents, and restricted cash came in at $160.43 million, down 18.5% year-over-year.
NET has lost 62.3% year-to-date to close the last trading session at $49.54.
NET’s POWR Ratings reflect its bleak prospects. NET has an overall D rating in our POWR Ratings system, equating to a Sell. It has an F grade for Value and a D for Momentum and Stability.
Click here to check additional NET ratings (Growth, Sentiment, and Quality). NET is ranked #23 in the same industry.
The Winner
Given today’s widespread hybrid lifestyle and rapid digitalization, the demand for cybersecurity services is expected to remain high. However, among the three stocks we discussed here, RDWR seems better positioned to deliver the biggest returns.
Our research shows that odds of success increase when one invests in stocks with an overall rating of Strong Buy or Buy. View all the top-rated stocks in the Software – Security industry here.
RDWR shares were trading at $22.54 per share on Wednesday afternoon, up $0.14 (+0.63%). Year-to-date, RDWR has declined -45.87%, versus a -16.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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