Increasing cybercrimes, such as the SolarWinds hack last year and the Colonial Pipeline incident earlier this year, have created increasing demand for advanced cybersecurity solutions. Notably, technology company Kaseya fell victim to a cyberattack earlier this month. Thus, governments worldwide have been taking measures to fight against cyber hackers. President Biden issued an executive order in May 2021 to improve the country’s cybersecurity threat defense.
Accelerating digitalization has necessitated companies’ increased reliance on cloud-based solutions, making them vulnerable to cyberattacks. Consequently, the demand for cybersecurity solutions is expected to go up in the foreseeable future. According to Grand View Research, the global cybersecurity market is expected to grow at a 10.9% CAGR over the next seven years. Also, investor interest in the cybersecurity industry is evidenced by the First Trust Nasdaq CEA Cybersecurity ETF’s (CIBR) 26.9% returns over the past nine months.
Against this backdrop, we believe it is wise to bet on the shares of established cybersecurity companies Check Point Software Technologies Ltd. (CHKP), Tenable Holdings, Inc. (TENB), and Radware Ltd. (RDWR). They are currently trading below their 52-week highs, but we think have plenty of upside to deliver.
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP is a leading provider of cybersecurity solutions for information technology (IT) security worldwide. Its solutions help protect customers from 5th generation cyber-attacks. Its offerings include Check Point Infinity Architecture, Check Point Network Security, and Check Point SandBlast family.
On July 7, 2021, CHKP announced that it was extending its multi-cloud support by integrating Check Point CloudGuard with Alibaba Group Holding Limited’s (BABA) Alibaba Cloud. This integration is expected to expand its consumer base in the cloud security space.
CHKP launched three new management applications—Check Point R81.10 software, Check Point Quantum Maestro 175, and Check Point Quantum Smart-1 Security—on June 28, 2021, to provide advanced protection for complex hybrid data centers with brisk operations and an ultra-scalable platform. With increasing digitization, the company could witness increasing demand for its solutions as several companies adopt cybersecurity solutions to protect themselves from cyberattacks.
CHKP’s total revenue increased 4.3% year-over-year to $507.60 million in the first quarter ended March 31, 2021. Its non-GAAP operating income grew 6.5% year-over-year to $246.30 million, while its non-GAAP net income improved 2.6% year-over-year to $211.20 million. The company’s non-GAAP EPS increased 8.5% year-over-year to $1.54.
A $7.21 consensus EPS estimate for its fiscal year 2022 represents a 6.5% improvement year-over-year. CHKP has surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s $523.77 million consensus revenue estimate for the quarter ended June 30, 2021, represents a 3.6% increase from the same period last year.
The stock has gained 2.6% over the past month to close Friday’s trading session at $122.19. However, CHKP is currently trading 12.3% below its 52-week high of $139.26, which it hit on December 29, 2020.
CHKP’s POWR Ratings reflect the promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings access stocks by 118 different factors, each with its own weighting.
CHKP is rated an A for Quality, and a B for Value. Within the Software – Security industry, it is ranked #6 of 25 stocks. To see additional POWR Ratings for Growth, Sentiment, Stability, and Momentum for CHKP, click here.
Tenable Holdings, Inc. (TENB)
Cybersecurity solutions company TENB serves more than half of the Fortune 500 companies. Its platforms include Tenable.io, a cloud-delivered software as a service, and Tenable.sc, an on-premises solution. TENB is based in Columbia, Md.
TENB partnered with CyberNB’s Critical Infrastructure Security Operations Center on June 10 to increase the resilience and security of Canada’s critical infrastructure. This partnership is expected to expand the company’s market reach in Canada.
TENB partnered with Deloitte in June to accelerate and secure smart manufacturing across Fortune 500 environments. Together, they have developed and implemented industrial-grade security solutions to help organizations understand, manage and reduce cyber risk in their manufacturing environments worldwide.
For the first quarter, ended March 31, 2021, TENB’s revenue increased 20% year-over-year to $123.19 million. The company’s non-GAAP income from operations came in at $13.89 million, compared to a $7.72 million loss in the prior-year quarter. Its non-GAAP net income was $14.75 million compared to an $8.83 million loss in the year-ago period. And its non-GAAP EPS came in at $0.13, versus a $0.09 loss per share in the prior-year period.
Analysts expect TENB’s revenue for the current year to be $522.68 million, representing an 18.7% increase from last year. The company’s EPS is likely to increase 42.1% year-over-year to $0.27 in the current year. It surpassed the consensus EPS estimates in each of the trailing four quarters.
TENB has gained 36.3% over the past year to close Friday’s trading session at $39.50. However, the stock is currently trading 32.4% below its 52-week high of $58.45, which it hit on January 19, 2021.
It is no surprise that TENB has an overall rating of B, which translates to Buy in our proprietary ratings system. It has a B grade for Growth, Sentiment, and Quality. In addition to the POWR Ratings grades we’ve just highlighted, we’ve also rated it for Value, Momentum, and Stability. Get all the TENB ratings here.
TENB is ranked #5 in the Software – Security industry.
Radware Ltd. (RDWR)
Based in Tel Aviv, Israel RDWR develops , manufactures, and markets cybersecurity and application delivery solutions for applications in physical, virtual, cloud, and software-defined data centers worldwide. Its application and network security products include DefensePro Attack Mitigation Device and AppWall Web Application Firewall.
The company expanded its partnership with Acantho on June 30 to provide cloud web application security protection to enterprise customers in Italy. Consequently, Acantho upgraded its own infrastructure with RDWR’s hybrid DDoS protection and will be offering RDWR’s Cloud WAF service.
RDWR also partnered with Involta last month, a leading IT, cloud computing, and data services company, to deliver DDoS protection to vital organizations nationwide. RDWR’s Chief Business Officer Raffi Kesten said, “The combination of Involta’s unmatched expertise in SLED markets with our own DDoS mitigation expertise will give organizations full confidence that they can maintain 24×7 access to online services and that their data will be fully safeguarded.”
The company’s revenue increased 11.3% year-over-year to $66.77 million for the first quarter, ended March 31, 2021. RDWR’s non-GAAP operating income increased 54.9% year-over-year to $7.48 million. The company’s non-GAAP net income for the quarter came in at $8.02 million, up 20.7% year-over-year. And its non-GAAP EPS grew 21.4% year-over-year to $0.17
RDWR’s revenue is expected to increase 13% year-over-year to $66.07 million for the about-to-be-reported quarter, ended June 30, 2021. Its EPS is expected to increase 12.5% year-over-year to $0.72 in its fiscal year 2021. It surpassed the Street’s EPS estimates in three of the trailing four quarters.
The stock has gained 24.8% over the past nine months to close Friday’s trading session at $30.38. However, it is currently trading 6.8% below its 52-week high of $32.59, which it hit on June 23, 2021.
RDWR’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. RDWR has an A grade for Growth and Quality. Click here to access RDWR’s ratings for Value, Momentum, Stability, and Sentiment also.
The stock is ranked #1 in the Software – Security industry.
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CHKP shares were trading at $120.47 per share on Monday afternoon, down $1.72 (-1.41%). Year-to-date, CHKP has declined -9.36%, versus a 13.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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