With an increasing online presence by organizations and a surge in the use of cloud services as well as non-physical data storage, cybercrime has also taken off. This rise in cyber threats has called for government investments and advancements in existing security measures, contributing to a booming cybersecurity market.

Considering this trend, investors could scoop up shares of fundamentally stable cybersecurity stocks CyberArk Software Ltd. (CYBR), Okta, Inc. (OKTA), and Check Point Software Technologies Ltd. (CHKP). These companies are well-positioned to capitalize on the growing need for robust cybersecurity solutions.

Cyber threats have been a recurring theme for businesses since the dawn of the internet itself. However, with most businesses switching to cloud storage and services for ease of use, these threats have seen a steep rise. Small to medium-sized businesses have suffered the most due to their little to no cyber-protection.

Nearly 41% of small businesses were hit hard by cyberattacks, with the United States being a major hotspot, accounting for 59% of all ransomware attacks globally. Moreover, in the third quarter of 2024, an average of 1,876 cyber-attacks per organization was recorded, marking a 75% increase year-over-year and a 15% rise from the previous quarter.

To counteract this situation, enterprises have started to invest significantly in cybersecurity, contributing to a more robust and advanced measure in recent times and aiding in fending off most of these attacks. Moreover, an allocation of $13 billion in cybersecurity funding for the fiscal year 2025’s federal budget also ensures the seriousness of this problem.

According to a report by Fortune Business Highlights, the global cybersecurity market size is expected to reach $562.72 billion by 2032, growing at a CAGR of 14.3%.

Now let us dive deep into the fundamentals of three Software – Security stocks, starting with #3.

Stock #3: CyberArk Software Ltd. (CYBR)

Headquartered in Petah Tikva, Israel, CYBR develops, markets, and sells software-based identity security solutions and services. The company offers solutions including Privileged Access Manager, Vendor Privileged Access Manager, Dynamic Privileged Access, Endpoint Privilege Manager and Secure Desktop.

On December 11, CYBR announced the launch of FuzzyAI, a cutting-edge open-source framework that has jailbroken every major tested AI model. The company’s new offering, FuzzyAI aids organizations to identify and address AI model vulnerabilities, like guardrail bypassing and harmful output generation, in cloud-hosted and in-house AI models.

With the rise in AI integration in cybersecurity, this offering could strengthen the company’s position in the cybersecurity industry.

On December 10, CYBR announced achieving a FIDO2 certification from the FIDO Alliance, a worldwide organization with a mission to reduce the world’s reliance on passwords, for its CyberArk Workforce Identity platform.

The certification validates CYBR Workforce Identity’s high standards for secure authentication and could enhance the company’s user growth.

For the fiscal 2024 third quarter that ended September 30, CYBR’s total revenues increased 25.6% year-over-year to $240.10 million. Its non-GAAP gross profit rose 26.7% from the year-ago value to $200.33 million. The company’s non-GAAP operating income grew 109.5% from the prior year’s quarter to $35.36 million.

Additionally, the company’s non-GAAP net income and non-GAAP net income per share increased 130.2% and 123.8% year-over-year to $45.14 million and $0.94, respectively.

Analysts expect CYBR’s revenue and EPS for the fiscal year ending December 2024 to increase 31.3% and 163.3% year-over-year to $987.52 million and $2.95, respectively. The company topped the consensus revenue and EPS estimates in all of the four trailing quarters, which is impressive.

Shares of CYBR have surged 21.9% over the past six months and 52.1% over the past year to close the last trading session at $333.15.

CYBR’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

CYBR has an A grade for Growth and Sentiment and a B for Quality. Within the A-rated Software – Security industry, CYBR is ranked #10 out of 20 stocks.

In addition to the POWR Rating highlighted above, you can check CYBR’s ratings for Stability, Momentum, and Value here.

Stock #2: Okta, Inc. (OKTA)

OKTA is an identity partner that offers products and services used to manage and secure identities, such as single sign-on, adaptive multi-factor authentication, API access management, access gateway, and Okta device access.

On October 16, OKTA announced a new Customer Identity Cloud product aimed at helping developers and organizations secure identity in GenAI applications, through secure identity standards. As the GenAI market expands on a rapid scale, the new offering could enhance OKTA’s market position and drive user growth.

On the same day, OKTA and the OpenID Foundation announced the formation of an OpenID Foundation working group with Ping Identity, Microsoft Corporation (MSFT), SGNL, and Beyond Identity to establish a new identity security standard, the Interoperability Profile for Secure Identity in the Enterprise (IPSIE).

The new security standard could enhance the end-to-end security of the companies’ products across every touchpoint of its technology stack.

For the fiscal 2025 third quarter that ended October 31, 2024, OKTA’s total revenue increased 13.9% year-over-year to $665 million. Its non-GAAP gross profit rose 14.4% from the year-ago value to $541 million. The company’s non-GAAP operating income grew 62.4% from the prior year’s quarter to $138 million.

Moreover, OKTA’s non-GAAP net income and non-GAAP net income per share increased 53.2% and 52.3% year-over-year to $121 million and $0.67, respectively.

Street expects OKTA’s revenue and EPS for the fiscal 2025 fourth quarter ending January 2025 to increase 10.6% and 16.9% year-over-year to $669.10 million and $0.74, respectively. Additionally, the company surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is noteworthy.

OKTA’s shares have surged 6% over the past three months to close the last trading session at $78.80.

OKTA’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

OKTA has an A grade for Growth and a B for Sentiment. Within the Software – Security industry, OKTA is ranked #8 out of 20 stocks.

To access OKTA’s Value, Momentum, Stability, and Quality ratings, click here.

Stock #1: Check Point Software Technologies Ltd. (CHKP)

With its headquarters in Tel Aviv, Israel, CHKP develops, markets, and supports a range of products and services for IT security. It also offers a multilevel security architecture, cloud, network, mobile devices, endpoint information, and IOT solutions.

On December 11, CHKP announced a 100% detection rate for its Infinity XDR/XPR in the 2024 MITRE ATT&CK® Evaluations. This achievement demonstrates Infinity XDR/XPR’s advanced capabilities to successfully detect and prevent threats, as well as providing security teams with the data they need to understand threats and respond effectively.

On November 20, CHKP announced its new Check Point Quantum Firewall Software R82 (R82) and additional innovations for the Infinity Platform. With over 50 new capabilities for enterprise customers, the company’s innovations could enhance its market position and drive user growth.

For the fiscal third quarter that ended on September 30, 2024, CHKP’s total revenues increased 6.5% year-over-year to $635.10 million. Its non-GAAP operating income rose 1.9% from the year-ago value to $274 million.

In addition, the company’s non-GAAP net income and non-GAAP EPS rose 5.4% and 8.7% from the prior year’s quarter to $255.40 and $2.25, respectively.

The consensus revenue and EPS estimates of $698.55 million and $2.65 for the fiscal fourth quarter that ended December 2024 exhibit a year-over-year rise of 5.3% and 3.2%, respectively. Moreover, the company surpassed the consensus revenue and EPS estimates in three of the four trailing quarters.

CHKP’s shares have surged 13.2% over the past six months and 22.2% over the past year to close the last trading session at $186.70.

CHKP’s robust fundamentals are mirrored in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

CHKP has an A grade for Quality. Within the Software – Security industry, it is ranked #6 out of 20 stocks.

Click here to access CHKP’s ratings for Stability, Value, Momentum, Growth, and Sentiment.

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CHKP shares were unchanged in premarket trading Thursday. Year-to-date, CHKP has declined 0.00%, versus a 0.00% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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