3 of the Best Cybersecurity Stocks in December 2020

Cybersecurity is more important than ever, with businesses shifting data and services to all-digital solutions. The advantages of using digital-only solutions are clear — speed, cost-savings, and efficiency. But there are risks too with these new solutions.

The need for digital security has become especially apparent among an avalanche of centralization failures. Decentralized technologies, whether in currencies or elsewhere, are also showing promise. Investors are thinking along these lines, with cybersecurity company shares going up following reports of Russian hackers targeting the US.

Russian Hack Sent Cybersecurity Stocks Up

Cybersecurity companies, including those that serve the government, immediately had their stocks rise in value as the reports emerged. The government will surely look into the matter now, and up their security game.

The attack’s targets include high-level government agencies, with roughly 18,000 customers affected via SolarWinds. Cybersecurity firm FireEye said that 25 entities were affected. It doesn’t come as a surprise that related companies are seen as potentially benefiting from this.

Some have made connections to the recent downtime experienced by Google and its services. Google hasn’t provided many details on this yet, so it’s a speculation at the moment. However, the same concern is present — we are woefully dependent on services that are subject to compromization.

Under these circumstances, and as there’s much room for growth in this space, related stocks are worth examining. Most stock traders are well aware of the vulnerability here, as even with the top stock trading apps, data security can be a concern. Just two months ago, for example, a small number of Robinhood accounts were hacked.

Cybersecurity Stocks with Great Fundamental Analysis

Even if some companies have seen their stock values at a high, there remain those that could be undervalued. The following are three top cybersecurity stocks worth examining, at the very least.

1. Splunk Inc. (NASDAQ:SPLK)

With companies increasingly moving towards a cloud-based infrastructure, the need to handle related services is essential. Splunk is an IT company that provides enterprise-level software to search, monitor, and analyze machine-generated big data.

Data analytics is also a critical part of modern tech infrastructure. To that end, the company’s products provide both data analysis and security services. Splunk’s earnings reports and a recent lawsuit does demand caution, but it is worth keeping an eye on.

• Splunk recorded $559 million in revenue in its third-quarter earnings report, missing Wall Street’s estimate of $613 million.
• The fiscal second-quarter report for 2021 showed that cloud ARR was $568 million, up 89% year-over-year.
• The company is transitioning to a software-as-a-service model, which has been claimed as the reason for the drop in performance

2. Fortinet, Inc. (NASDAQ:FTNT)

Fortinet is a cybersecurity firm that develops products like firewalls, anti-virus, intrusion prevention, and endpoint security. The company has embraced newer technologies, producing an AI-based threat detection program.

Fortinet has also moved into cloud services and has over 500 issued patents to its name. Its newest offerings are precisely the kind of security that companies will consider in the wake of the recent attack.

• In its third-quarter report for 2020, the company recorded total revenue of $651.1 million, up 19% year-over-year.
• The Q3 report also showed a free cash flow of $185.7 million.
• The company expects a revenue between $710 million and $730 million for the fourth-quarter.
• Fortinet acquired cloud security company OPAQ in July 2020 in a bid to boost its cloud security services.

3. Dynatrace, Inc. (NASDAQ:DT)

A software intelligence that uses AI, Dynatrace serves businesses and governments in multiple countries. These services include IT operation analytics, infrastructure monitoring business, and analytics.

The company only went public in August 2019. It has won numerous awards, including the best overall AI-based analytics company for business intelligence and analytics. Dynatrace is also developing application security solutions.

• In its fiscal second-quarter report for 2021, it reported a total revenue of $168.6 million, up 30% year-over-year.
• Subscription revenue was $157.7 million, an increase of 36% year-over-year.
• GAAP EPS was $0.06 and non-GAAP EPS was $0.18.

Conclusion

These are only some of the cybersecurity stock choices at your disposal. Both computers and mobile devices require stronger security solutions. Investors would do well to put thought into these stocks now, under the lens of proper fundamental analysis, and get a headstart on a growing industry.

What do you think of the stocks listed here? Do you have some recommendations of your own? Let us know your thoughts in the comments below.

Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.