CYBERSECURITY SILENCECybersecurity stocks have been quiet for awhile. And when you drill down into the numbers of the top 5 or so companies, their underlying strength is questionable. Because of the increasing need for cybersecurity, do you folks have any favorites and, if so, why do you rely on them? The AI focus these days has dimmed the focus on cybersecurity, which should be our number one focus.
Thanks for any input.
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I’ve always had trouble distinguishing the product offerings from the various cybersecurity companies, which makes it hard to make long-term investments in the space. There are some companies with very strong growth, like Crowdstrike and Fortinet and Palo Alto Networks, but the ones that seem somewhat appealing are also super expensive. It has seemed for many years as though cybersecurity should be a “no brainer” investment, because it’s becoming more and more important for so many companies, and yet the average cybersecurity company hasn’t been an above-average investment. This is the oldest ETF in this space, HACK, compared to the S&P 500 since 2015:
Which means you can’t just ‘buy the trend’, you have to find the best companies. I’ve failed at that so far, but if other folks have ideas or better ways to differentiate the major players, I’m all ears. The big ones that stand out as outperformers over the past four years are FTNT, CRWD and PANW — CRWD and PANW are the ones who have had the best momentum recently, mostly because FTNT shares fell 25% after warning of a sales slowdown in early August. This should be an area where “winner takes most”, as in a lot of technology sectors, so if I were forced to buy a stock in this sector I’d probably stick with one of those current leaders.
Travis, thanks for your comments.
I’ve invested in the past in FTNT, ZS and PANW, but none really panned out. I’ve taken a closer look at CRWD and recently made a buy on the dip. It still escapes me why there aren’t more in-depth articles and reports on cybersecurity companies. With all that is happening in the world, threats to our infrastructure should be one of our top priorities. Where can we go to get more information on this important technology (in common English and not techno-talk)?
I think the issue is the monolithic nature of these companies. What I mean is they don’t trade data very well between themselves. So if a small startup comes along with a nifty AI driven security whiz bang, very hard to integrate into whatever ecosystem the employer of the monolithic system faces…and if nifty startup is purchased by monolithic A, then B and C don’t have it… but employers of the B ad C system are not going to switch… hence the stagnation.
Thank you, bnsmith, for your thoughts.
I bought into CRWD two months ago and they’re up 38% since then. I keep trying to get more information on the strongest cybersecurity companies and there is a scarcity of understandable information. I have noticed that QLYS has a lot of positive information, is a strong company with a solid trend and have been watching it. Will be buying it on the dip which is approaching a good “buy” opportunity per the RSI and MACD graphs…probably within the next week or so. I’m still hungry for more opportunities in this space and can’t understand why there isn’t more information out there in publications such as Barron’s and the Wall Street Journal.