The Russian-driven war is bringing an increased number of cyber attacks and these 3 companies stand to profit handsomely

We all try to seek out investment opportunities, but it's not always that easy. These days I often read about how cyber attacks are increasing inexorably because of war. You can find dozens of articles on the internet overlapping one cyber attack after another, which can only get worse as the war progresses (this summer even saw one of the sharpest increases). As an investor, this leads me to a single question - How can I capitalize on these negatives? The answer is pretty simple on the whole, which leads me to this article where we look at 3 interesting cybersecurity stocks that may see growth during this period.

However, don't think that the increased cyber attack activity is just due to war. An increasing number of attacks have been noted as early as 2020-2021.

It has been clear that war will have many negative impacts, but it will also create investment opportunities for us. By this we mean that, at this time, armaments manufacturers and certain cyber defence companies, for example, are strengthening considerably, which can gain new customers as a result of the excessive frequency of cyber attacks, but above all show strong growth. In general, it is expected that the risk of attacks, and the associated damage, will see an upward trend until at least 2025, where it is expected to peak, but a continuation of the upward trend may persist until 2030 and beyond.

Here we go! These 3 companies may benefit from the negative effects of war - cyber attacks on the rise 👇

1. Crowdstrike Holdings $CRWD+0.2%

The first thing that comes to mind (if you know $CRWD+0.2% ) is that it's too expensive. On the other hand, we've been hearing this since 2020, where the company grew by a whopping 200+% and has shown more and more growth since then. Regardless of the current valuation, $CRWD+0.2% is the clear leader, with the stock price nearly tripling in the last 3 years.

CrowdStrike is one of the largest in the cybersecurity industry in terms of market capitalization. Their Falcon architecture offers AI-powered cybersecurity solutions. It provides endpoint security services and proactive threat intelligence offerings.

What makes the company unique?

The company has been named a leader in endpoint detection and response providers by Forrester, far ahead of competitors such as Microsoft and SentinelOne.

What is endpoint protection?

It is a cybersecurity technology that monitors "endpoints" connected to the internet (smartphone, laptop or any smart device). All are potential threats. So ensuring that these threats have the right detection and response has become critical.

CrowdStrike's ability to add new features to its platform through innovation and acquisitions shows the company's strength. The modules that will drive the majority of growth in 2022 focus on firewall management, zero trust, and identity threats. Overall, with an integrated cloud-native platform that improves and scales with added features over time, CrowdStrike sees an expanding moat that could become increasingly difficult for competitors to replicate. CrowdStrike is constantly adding new cloud modules to its Falcon platform, giving the company optionality and the potential to expand its addressable market.

One important aspect is the dollar-based retention rate (or net revenue retention), which shows how much money a company makes from the same cohort of customers over time. CrowdStrike has maintained a dollar-based retention rate above 120% for the past 17 quarters, which is very impressive.

2. Palo Alto Networks $PANW+1.6%

Palo Alto Networks is a diversified cybersecurity company that secures enterprises around the world.

$PANW+1.6% is truly a heavyweight and a big player, as evidenced not only by its market capitalization and strong growth, but also by its great quarterly results, innovation, and massive share buybacks.

Palo Alto Networks is a global cybersecurity company serving more than 70,000 organizations in 150 countries, including 85 of the Fortune 100 (the 100 largest public and private companies in the U.S.).

  • Theglobal cybersecurity market is projected to grow at a compound annual growth rate of 13.4% from 2021 to 2029, putting the wind in the sails of $PANW+1.6% as the dominant player.

Palo Alto Networks is a diversified cybersecurity company that is best known for being a leader in network security firewalls. However, the company is gradually transitioning to a software-centric model to help with "next-generation" cybersecurity, which includes hybrid cloud and remote worker security. Palo Alto Networks is now a leader in 7 categories and is poised to drive growth in a variety of product areas from firewalls to zero trust and even endpoint security.

$PANW+1.6% reports strong quarterly results

Palo Alto Networks reported strong financial results for the fiscal fourth quarter of 2022. Revenue was $1.55 billion, up 27% year-over-year. As a company that offers services on a contract basis, billings are a useful metric to focus on because it is the annual amount billed to the customer. In this case, total billings were up a whopping 44% year-over-year to $2.69 billion.

One of the important metrics remains the following - The company may also appear to be expensive, however, an important point in the quarterly report was that the company's outstanding accounts payable - the sum of the invoiced amount and future amounts not yet invoiced for the customer contract - is growing massively. This metric saw a huge 40% year-over-year growth to $8.2 billion, making future revenue forecasts more predictable.

3. Fortinet $FTNT+1.3%

I realizethat many of you are expecting me to list Palantir, but you definitely won't find it in my selection 😄.

The most attractive valuation is probably to be found here, as Fortinet has already fallen 28% since its ATH, which on the one hand was due to the results being marred by the end and loss of sales in Russia(still not a bad quarter when looking at sales, earnings and profit margins).

The $FTNT+1.3% solutions are focused on automated network security solutions. This is a network security company that has a significant portion of its business exposed to product sales. These are typically one-off sales.

Undoubtedly, the most compelling reason to invest in this company is that it has very high gaap profit margins (even compared to its competitors). From Q2 2021 through Q2 2022, the margins are as follows = 18%,19%,22%,16%, 19%.

I take it as one of the main and attractive news that the company has acquired almost 700 deals during Q2, which is 100 more than last quarter.

$FTNT+1.3% expects a strong rest of the year, where for Q3 the company expects revenue of $1.105-1.135 billion, reflecting 29% year-over-year growth. In addition, gross margin is expected to remain healthy at 75-76% and operating margin at 25-26%.

Conclusion

All 3 stocks mentioned would deserve a solo article as there are really a lot of things and numbers to analyze, however, I don't want to bore you with analyzing all 3 in detail, so I am just giving you some insight on these 3 giants. My chosen trio is one of the top in the industry, which is signed on the results, but also on the valuation, which may seem high at the moment. However, if an investor is looking for quality, these 3 companies are the ones that can continue to benefit from the trend of cyber attacks. Of course, some may say that Palantir over there is brilliant and currently has a decent downside, but that is irrelevant at this point as their numbers are not appealing. These 3 companies are generating decent numbers in terms of sales, profits, margins and billings. This trend of increasing cyber attacks should continue to grow strongly over the next couple of years, which may propel these companies to even higher levels. I understand that these won't be attractive options for everyone, no one wants to buy at high prices, but no one is arguing to make the investment right away either, the macroeconomic environment is weighing on absolutely all companies (including these), which may make the prices of these giants even more expensive during the fall.

Please note that this is not financial advice. Every investment must go through a thorough analysis.

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