2 Cybersecurity Stocks to Buy in January The demand for advanced cybersecurity solutions is expected to increase in the coming months with the growing adoption of cloud-based technologies. As such, we think it could be wise to...
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The demand for advanced cybersecurity solutions is expected to increase in the coming months with the growing adoption of cloud-based technologies. As such, we think it could be wise to bet on fundamentally sound cybersecurity stocks NortonLifeLock (NLOK) and TrendMicro (TMICY). So, let's take a closer look at these names.
The remote lifestyle and rapid digital transformation amid the COVID-19 pandemic has led to an increasing number of cyber-attacks, given the growing dependency on cloud computing. With the resurgence of COVID-19 cases with the spread of its omicron variant, and with that the continuation of hybrid working, cybersecurity companies should witness steady demand for their products and solutions. As the world becomes increasingly reliant on digital solutions, the demand for cybersecurity solutions is expected to increase. According to Grand View Research, the global cyber security market is expected to grow at a 10.9% CAGR through 2028.
Investors' interest in the cybersecurity space is evident in the First Trust NASDAQ Cybersecurity ETF's (CIBR) 10.6% gains over the past six months versus the tech-heavy Nasdaq's 6.9% returns.
Given this backdrop, it could be wise to bet on NortonLifeLock Inc. (NLOK) and Trend Micro Incorporated (TMICY). These cybersecurity stocks are expected to generate significant returns in the coming months because of their innovative products and services.
Click here to checkout our Cybersecurity Industry Report
NortonLifeLock Inc. (NLOK)
Formerly known as Symantec Corporation, NLOK in Mountain View, Calif., provides cyber safety solutions to consumers worldwide. The company offers Norton security solutions as a subscription service that protects desktop and mobile devices against malware, viruses, adware, ransomware, and other online threats on various platforms.
On November 4, 2021, Vincent Pilette, CEO of NLOK, said, "Our commitment to product innovation and consistent execution are strengthening our foundation for the future. Today, NortonLifeLock shareholders voted overwhelmingly to support our ongoing transformation through the proposed merger with Avast. We are just getting started."
NLOK's revenue climbed 11% year-over-year to $695 million for its fiscal second quarter, ended October 1, 2021. The company's non-GAAP operating income grew 15.6% year-over-year to $363 million, while its non-GAAP net income came in at $255 million, representing an 18.6% year-over-year increase. Also, its non-GAAP EPS was $0.43, up 19.4% year-over-year.
For its fiscal 2022, analysts expect NLOK's EPS and revenue to increase 20.8% and 9.7%, respectively, year-over-year to $1.74 and $2.80 billion. It surpassed the Street's EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 26.7% in price to close yesterday's trading session at $26.33.
NLOK's POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system. It has an A grade for Quality and a B grade for Value. Click here to see the additional POWR Ratings for NLOK (Growth, Sentiment, Stability, and Momentum). It is ranked #5 of 27 stocks in the Software - Security industry.
Trend Micro Incorporated (TMICY)
Based in Tokyo, Japan, TMICY develops and sells security-related software for computers and the Internet. It also provides user protection solutions that comprise endpoint security, email and Web security, endpoint and gateway suites, SaaS application security, and endpoint detection and response.
On Nov.22, TMICY announced cloud security in data centers across nine countries. This represents the broadest global distribution of data centers from any security company, supporting the world's largest number of cloud security customers. This move could lead to increasing demand for its solutions.
The company's net sales increased 10.7% year-over-year to 434.58 million for its fiscal third quarter, ended Sept. 30, 2021. The company's operating income grew 67% year-over-year to $113.59 million, while its net income came in at $83.25 million, representing a 137.8% year-over-year increase.
Analysts expect TMICY's annual revenue to increase 141.1% year-over-year to $1.64 billion in fiscal 2021. Over the past nine months, the stock has gained 10.7% in price to close yesterday's trading session at $55.70.
It is no surprise that TMICY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Stability and Quality and a B grade for Value. Click here to see TMICY ratings for Momentum, Growth, and Sentiment as well. TMICY is ranked #1 in the same industry.
Click here to checkout our Cybersecurity Industry Report
NLOK shares rose $0.16 (+0.61%) in premarket trading Tuesday. Year-to-date, NLOK has gained 1.96%, versus a 0.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock's price is the key approach that he follows while advising investors in his articles.
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