The cybersecurity industry is well-positioned to register solid growth in the long run as organizations continue to integrate advanced technologies into their business models and increasing amounts of data is accessed over the internet. Against this backdrop, we think adding the stocks of cybersecurity concerns Check Point Software (CHKP), OneSpan (OSPN), Radware (RDWR), and Qualys (QLYS) to one’s portfolio could be beneficial. These stocks are Buy-rated in our proprietary rating system. Read on.
As increasing amounts of data are accessed through the internet with the number of e-commerce platforms rising and technological advancements, the demand for network security solutions to eliminate cyber threats is increasing. Also, governments are investing significantly in security solutions to secure their confidential data and information.
With organizations and verticals continuing to integrate advanced technologies such as the Internet of Things (IoT), 5G, Web 3.0, and blockchain, connected points of vulnerability have increased more than ever before, and ensuring security has become one of the biggest challenges spanning every industry. Moreover, the Russia-Ukraine war has exposed Western countries to increased cyberattacks and online security risks, thereby increasing opportunities for cybersecurity companies. The global cybersecurity market is anticipated to grow at a 13.4% CAGR from 2022 to 2027.
Given this backdrop, we think the stocks of cybersecurity companies Check Point Software Technologies Ltd. (CHKP), OneSpan Inc. (OSPN), Radware Ltd. (RDWR), and Qualys, Inc. (QLYS) could be valuable additions to one’s portfolio. These stocks are Buy-rated in our property POWR Ratings system.
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP develops, markets, and supports a range of products and services for IT security worldwide.
On May 18, 2022, CHKP announced the availability of a new version of Harmony Mobile, the first mobile threat solution that prevents the download of malicious files. Harmony Mobile is among the industry’s top leading vendors to provide the most complete and robust mobile security solution in an era where we are all becoming more reliant on mobiles. This is expected to be strategically beneficial for the company.
On May 17, the company announced its partnership with an international CCTV market leader Provision-ISR. The partnership will involve Check Point Quantum IoT Protect Nano Agent embedded in Provision-ISR’s CCTV cameras for on-device runtime protection against zero-day attacks. The solution is expected to bring an entirely new level of cybersecurity to the video surveillance market.
CHKP’s total revenues have increased 6.9% from the prior-year quarter to $542.70 million in its fiscal first quarter, ended March 31, 2022. Its net cash provided by operating activities for the quarter was $398 million, reflecting a 6.3% increase year-over -year.
The $1.61 consensus EPS estimate for its fiscal second quarter, ending June 3o, 2022, represents a 0.2% improvement year-over-year. The $560.23 million consensus revenue estimate for the same quarter represents a 6.5% increase from the same period last year. CHKP has an impressive surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
CHKP has gained 10.1% over the past year and 11.3% year-to-date to close the last trading session at $129.76.
CHKP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
CHKP has an A grade in Quality. It is ranked #3 of 30 stocks in the Software – Security industry.
Beyond what is stated above, we have also rated CHKP for Momentum, Stability, Sentiment, Value, and Growth. Get all the CHKP ratings here.
OneSpan Inc. (OSPN)
Oakbrook Terrace, Ill.-based OSPN designs, develops, and markets digital solutions for identity, security, and business productivity that protect and facilitate electronic transactions via mobile and connected devices.
OSPN’s total revenues increased 3.3% year-over-year to $52.45 million in its fiscal quarter ended March 31, 2022. Its gross profit grew 7.1% from its year-ago value to $36.68 million. The company’s net income has increased 157% year-over-year to $5.21 million over the period. Also, its net income per share came in at $0.13, up 156.5% from the prior-year quarter.
The Street expects OSPN’s revenue for its fiscal third quarter, ending Sept. 2022 to improve 2.1% year-over-year to $53.36 million. Also, the $215.86 million consensus revenue estimate for the current fiscal year represents a 0.6% increase year-over-year. The company surpassed the consensus EPS estimates in three of the trailing four quarters.
OSPN’s shares have gained 3.2% in price over the past three months to close the last trading session at $13.74. The stock has gained 0.8% over the past month.
It is no surprise that OSPN has an overall B rating, which equates to Buy in our POWR Ratings system.
OSPN also has a B grade in Value and Quality. In the Software – Security industry, OSPN is ranked #4.
In addition to the POWR Rating grades I have just highlighted, one can see OSPN’s Growth, Momentum, Stability, and Sentiment ratings here.
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR develops, manufactures, and markets cyber security and application delivery solutions for applications in the cloud, physical, and software-defined data centers worldwide.
On June 1, RDWR announced the expansion of its partnership agreement with Onesecure, a managed security service provider, to enhance ONESECURE’s Webyith defacement and domain phishing monitoring solutions with added application and API protection capabilities. This should allow RDWR to leverage ONESECURE’S technical excellence and expertise and enhance its market reach.
For its fiscal quarter, ended March 31, 2022, RDWR’s revenue increased 10.4% year-over-year to $73.71 million. Its gross profit grew 11.5% from its year-ago value to $60.77 million, while its operating income for the quarter stood at $3.59 million, reflecting a 39% year-over-year increase.
Analysts expect RDWR’s revenue for its fiscal quarter ending June 30, 2022, to be $75.65 million, indicating an 8.6% increase year-over-year. Also, the company’s EPS is expected to grow 2.6% year-over-year to $0.20 in the same period. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
RDWR shares slumped 1.2% in price intraday to close the last trading session at $25.02.
RDWR’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our POWR Ratings system.
The company also has a B grade in Growth, Sentiment, and Quality. The stock is ranked #1 in the Software – Security industry.
To get RDWR’s ratings for Momentum, Stability, and Value, click here.
Qualys, Inc. (QLYS)
QLYS in Redwood City, Calif., provides a cloud-based platform that delivers information technology (IT), security, and compliance solutions that enable organizations to identify security risks to their IT infrastructures and protect their IT systems and applications from cyber-attacks. The company provides solutions through a software-as-a-service model with renewable annual subscriptions.
On May 17, QLYS unveiled the Qualys Custom Assessment and Remediation to its Cloud Platform. “Qualys Custom Assessment and Remediation enables the creation of custom scripts and controls that are seamlessly integrated into existing security processes and workflows, while extending the capabilities of the Cloud Agent so organizations can respond to threats such as Zero-Days immediately,” said Nagi Prabhu , chief product officer, Qualys.
In April, the company announced the delivery of Multi-Vector EDR 2.0 with additional threat-hunting and risk mitigation capabilities, improving alert prioritization and reducing the time needed to respond to threats. The company expects this to provide broader environmental insights to QLYS, helping it quickly react to high-priority threats and help better serve its customers.
QLYS’s revenue increased 17.2% year-over-year to $113.42 million in its fiscal quarter ended March 31, 2022. Its income from operations grew 1,339.7% from its year-ago value to $33.54 million, while its net income improved 11,044.7% year-over-year to $25.41 million. Its net EPS increased 6,300% from its year-ago value to $0.64.
QLYS’s revenue for the current quarter is expected to be $117.52 million, indicating a 17.9% year-over-year growth. The company’s EPS is expected to increase 0.3% year-over-year to $0.79 for the same quarter. QLYS also beat the consensus EPS estimates in the trailing four quarters.
Over the past nine months, the stock has gained 10.6% in price to close yesterday’s trading session at $132.30. The stock gained 34% over the past year.
QLYS’s POWR Ratings reflects this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system.
QLYS is rated A in Quality. It is ranked #5 in the Software – Security industry.
To see additional POWR Ratings for Growth, Value, Momentum, Stability, and Sentiment for QLYS, click here.
CHKP shares rose $0.24 (+0.18%) in premarket trading Monday. Year-to-date, CHKP has gained 11.32%, versus a -13.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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