Expect strong demand for cybersecurity stocks

Maxim Manturov (Head of Investment Advice at Freedom Finance Europe)

Maxim Manturov, Head of Investment Advice at Freedom Finance Europe, explores three companies that have made strong innovative moves in the cyber security sector this year, making them a reasonable investment opportunity for the future. 

THE cyber security sector is constantly changing and, as we have seen in the media as of late, cyber threats are becoming more serious and occurring more frequently. The focus on meta-universes, the cloud, and the periodic cyber-attacks only reinforce the belief that the field is becoming more of interest to investors due to the importance it has on the running of businesses day-to-day. In this article, we highlight the leading companies in the cyber security sector that have made strong moves and taken influential positions in cybersecurity over the past year. 

Salesforce is at the forefront of cyber security 

Salesforce is a cloud platform that allows you to create and deploy bespoke solutions, automate business processes, and integrate external applications. 

Most of the world’s companies are Salesforce customers and use the platform for their business needs. These include Adidas, Canon, Toyota, Western Union, Cisco, and many others. Salesforce partners with various members of the IT world and offers out-of-the-box integration solutions and enhanced services to meet customer requirements. These include Apple, Microsoft, Google, and Amazon. 

Since 2019, revenue and gross profit have been growing steadily for Salesforce. This is an indicator that the company is using more production capacity and providing more goods and services each year. 

Operating income (loss) reflects income or loss from operating activities. In 2020, Salesforce experienced a drawdown of 10% due to the economic downturn because of the pandemic. In 2021 however, Salesforce increased by 20% year-over-year compared to 2020. 

The last indicator is net income. In 2020, there was a whopping 3100% year-over-year increase, which may be because the company’s assets increased upon revaluation by an independent auditor. It is therefore not worth investing in the company’s stock based on these figures alone. But, as mentioned above, the operating profit is gradually showing growth, so you can start looking at the company’s stock starting at £129.63 per share. 

Tenable Holdings Inc. is an up-and-coming cyber security solutions provider

Tenable Holdings Inc. is an American technology company that develops and provides software for Cyber Exposure, which is one of the newest categories of cybersecurity. 

There are two main corporate platforms in the company’s product portfolio. The first is Teneable.io which is a cloud-based software for managing and measuring cyber threats on a range of IT assets. The second is Tenable.sc, a local software for managing and measuring the cyber impact on a range of IT assets. 

Tenable Holdings Inc. has revenue and gross profit continuing to grow year-on-year, but operating income and net profit are not. Why is this? The bottom line is that the money generated from the sales of its goods and services is poured into finding new solutions and developing technology. Therefore, at the moment, the company is making a loss, and only in the next few years, it is going to make a profit. This can be seen in both operating and net profit trends because the loss has fallen by 111% in the past three years. There is no call to buy back shares of Tenable Holding Inc. now, but when the price reaches £34.7 per share, you should take a closer look. 

Fortinet’s outlook for the company’s undisputed leader 

Fortinet is an American multinational corporation that provides security to the world’s largest enterprises, service providers, and government organisations around the world. The company provides its customers with intelligent protection against attacks, and the ability to meet the ever-increasing demand for borderless network performance. 

As far as financial performance, the company is very stable. Despite the pandemic in 2020, the company has not suffered, and all four financial indicators have grown. Another positive for the company is the rapid growth of operating income. This indicates that the company is earning more money from its operating (core) activities every year. In 2021, for example, it totaled £492.7 million, thereby growing by 31% year-over-year. 

Do we recommend this company’s shares for purchase? Yes, but not at the current price. We think it is reasonable to start buying shares at a small percentage of the deposit starting at £190.6 and to average out on further declines. 

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