Now that seemingly everything is shifting to the web, investing in cybersecurity stocks is a financially prudent move. There is still plenty of money to be made in the cybersecurity industry, even though this space has outperformed most other segments in the prior 18 months.
The best way to approach the cybersecurity segment is with a buy-and-hold strategy. This economic space will continue to expand as work, training, and education rapidly move to the web.
Zscaler (ZS) has emerged as a cybersecurity sector darling. However, Radware (RDWR) isn’t nearly as well-known, mainly because the mainstream investing media over-focuses on the industry’s power players. Let’s take a look at each of these cybersecurity stocks.
ZS has been in business since the autumn of 2007, when it was known as SafeChannel. ZS is now one of the top cloud-based cybersecurity specialists on the planet. Its’s offerings include web security, firewalls, vulnerability assessment and management, antivirus, cloud computing, and plenty more.
ZS has been on a roll as the pandemic has played out. The company’s fourth-quarter results came in better than analysts anticipated, generating even more interest in the stock. However, this interest was not completely bullish as ZS dropped 3% after posting its latest quarterly earnings.
ZS’s appeal is partially attributable to its disruption of the cybersecurity industry. Tech gurus far and wide praise ZS’s cloud-native platform that safeguards computing environments located away from corporate offices and other places of business. ZS’s platform is unique as it doesn’t require the implementation or configuration of sometimes burdensome on-site infrastructure.
ZS is trading $20 below its 52-week high of $293.44. The stock has a 52-week low of $120.34. Its forward P/E ratio of 500.44 is very concerning, to say the least. This is an outrageously high ratio that will undoubtedly cause many investors to turn away from the stock.
ZS is also a POWR Ratings disappointment as it has an overall grade of C, which translates into a Neutral rating. The company has a Value Grade of and a Stability Grade of D. You can find out how ZS grades in the rest of the components, including Growth, Momentum, Sentiment, and Quality, by clicking here.
Out of the 25 stocks in the Software – Security industry, ZS is ranked 18th. Investors can find the top stocks in this industry by clicking here. Analysts are bullish on ZS, with an average analyst target price of $305. A move to this price level equates to a nearly 14% increase.
RDWR develops cybersecurity solutions that direct web traffic throughout network resources for ongoing internet access without interruption. The company’s extensive web traffic management products and services are used by all different businesses, including service providers, e-tailers, and multinational corporations. Companies and organizations that rely on uninterrupted web and application access are quick to sing the praises of RDWR’s services.
RDWR has an overall grade of B and a Buy rating in the POWR Ratings system. The stock has A grades in the Quality and Growth components. Click here to find out how RDWR grades in the rest of the components, including Value, Momentum, Stability, and Sentiment.
RDWR has zoomed up the Software – Security rankings, achieving a rank of second overall out of the 25 stocks in the industry. Of the analysts who cover RDWR, five rate it a Buy or Strong Buy.
Which Cybersecurity Stock is the Right Play?
RDWR’s overall rating in the POWR Ratings and industry rank are superior to those of ZS. RDWR is also attractive as it has a lower forward P/E ratio than ZS. Plus, RDWR’s components grades are also better than ZS. Taken together, RDWR is the better buy.
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ZS shares were trading at $268.97 per share on Thursday morning, down $4.47 (-1.63%). Year-to-date, ZS has gained 34.68%, versus a 19.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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