The economy was gradually recovering when the reports of a new variant of COVID-19 named omicron, first discovered in South Africa, posed a new concern for investors. The markets have remained volatile because investors have been treading carefully over the past few weeks due to rising COVID-19 infections in Europe and record-high U.S. inflation data for October. However, initial reports suggest that the fears related to the COVID-19 omicron variant may have been exaggerated because the variant has so far been found to cause mild illness.
With digitization sweeping across various industries, the need for cybersecurity has grown significantly. With data now being considered the new oil, it has become increasingly important for enterprises to spend on cybersecurity to protect their data from breaches. According to a Research and Markets report, the global cybersecurity market is expected to grow at a 9.7% CAGR to $345.40 billion by 2026.
Given this backdrop, we think it could be wise to buy the dip in quality cybersecurity stocks NortonLifeLock Inc. (NLOK), Qualys, Inc. (QLYS), and Radware Ltd. (RDWR), given their impressive growth potential.
NortonLifeLock Inc. (NLOK)
NLOK in Mountain View, Calif., helps consumers protect their devices, data, identity, online privacy, and home networks from cyberattacks. The company sells its cyber safety solutions through its websites and retail partners, telecom service providers, and hardware OEMs. Also, its product offerings include Norton 360 security, Norton Security, Norton Secure virtual private network (VPN), and Avira Security.
On November 15, NLOK announced that the U.S. Department of Justice had cleared its merger with Avast Plc. because the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 had expired. The merger is expected to be completed by mid-2022 and is expected to strengthen NLOK’s cyber security platform and help it expand its reach to more than 500 million users.
NLOK’s non-GAAP revenue for its fiscal second quarter, ended October 1, 2021, increased 10.5% year-over-year to $695 million. The company’s non-GAAP operating income increased 15.6% year-over-year to $363 million, while its non-GAAP net income increased 18.6% year-over-year to $255 million.
Analysts expect NLOK’s EPS for its fiscal year 2022 to increase 20.8% year-over-year to $1.74. Its revenue for its fiscal year 2023 is expected to increase 10.7% year-over-year to $3.10 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has declined 1.7% in price over the past month to close yesterday’s trading session at $24.34. However, it has gained 26.3% over the past year and 20.5% over the past nine months.
NLOK’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Quality and a B grade for Value. It is ranked #5 out of 27 stocks in the Software – Security industry. Click here to see the other ratings of NLOK for Growth, Momentum, Stability, and Sentiment.
Qualys, Inc. (QLYS)
QLYS provides a cloud-based platform that delivers information technology, security, and compliance solutions that enable organizations to identify security risks to their IT infrastructures and protect their IT systems and applications from cyberattacks. It serves enterprises, government entities, and small- and medium-sized businesses across various industries, including education, financial services, technology, and utilities. QLYS is based in Redwood City, Calif.
On October 26, 2021, QLYS announced the establishment of two new multi-tenant cloud platforms that will cater to the needs of Australia/New Zealand and the United Kingdom. The company’s highly scalable cloud platform has allowed it to meet increasing customer demand, provide faster service and expand its global operations.
For the third quarter, ended September 30, 2021, QLYS’ revenues increased 13% year-over-year to $104.90 million. The company’s non-GAAP net income increased 8.9% year-over-year to $34.20 million, while its adjusted EBITDA increased 11.5% year-over-year to $50.30 million. In addition, its non-GAAP EPS came in at $0.86, representing an 11.6% year-over-year rise.
QLYS’ EPS and revenue for the quarter ending December 31, 2021, is expected to increase 12.7% and 14.4%, respectively, year-over-year to $0.8 and $108.43 million. It has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 6.2% in price over the past month to close yesterday’s trading session at $126.65. However, it has gained 37.9% over the past year and generated 30.7% returns over the past nine months.
QLYS’ POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Quality. It is ranked #6 in the Software – Security industry. To see the additional POWR ratings of QLYS for Growth, Value, Momentum, Stability, and Sentiment, click here.
Radware Ltd. (RDWR)
Headquartered in Israel, RDWR provides cyber security and application delivery solutions. The company’s solutions incorporate Distributed Denial of Service protection, Web Application Firewall (WAF), and Application Delivery Controllers (ADC) technologies. Also, its products and activities ensure protection against cyberattacks, and the optimal application service level for enterprises and carriers’ data centers.
On October 27, 2021, RDWR announced that it is collaborating with Netsync to help its enterprise and public sector customers safeguard their Amazon Web Services (AWS) workloads. RDWR’s solutions could witness increased demand because it is assisting organizations in gaining more visibility and control across their cloud-hosted assets.
RDWR’s revenues for its fiscal third quarter, ended September 30, 2021, increased 17% year-over-year to $73.41 million. The company’s ARR came in at $185 million, up 9% year-over-year. And its non-GAAP operating income increased 69% year-over-year to $11.62 million.
Analysts expect RDWR’s EPS and revenue for its fiscal year 2022 to increase 7.4% and 8.3%, respectively, year-over-year to $0.87 and $308.81 million. The stock has declined 11.3% in price over the past month to close yesterday’s trading session at $29.83. However, it has soared 17.3% over the past year and 14.7% over the past nine months.
RDWR’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and Quality. It is ranked #2 in the Software – Security industry. Click here to see RDWR’s ratings for Value, Momentum, Stability, and Sentiment.
Want More Great Investing Ideas?
NLOK shares were trading at $24.88 per share on Tuesday morning, up $0.54 (+2.22%). Year-to-date, NLOK has gained 22.19%, versus a 26.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|NLOK||Get Rating||Get Rating||Get Rating|
|QLYS||Get Rating||Get Rating||Get Rating|
|RDWR||Get Rating||Get Rating||Get Rating|