The Bottom Line:
- The cybersecurity industry has seen a 12-month price increase, closing at $453, with investors paying a premium for these stocks.
- Top picks include Palo Alto, CrowdStrike, Check Point, and Palo Alto, with some undervalued options like OneSpan and Qualys.
- Palo Alto is trading in a tight range, with resistance at $323 and a gap to fill at $362.
- CrowdStrike shows bullish momentum, with moving averages in favor and earnings per share climbing over the last 30 days.
- Speculative plays like Latch and Audiocodes show potential, with strong sales growth rates and improving earnings per share.
The Booming Cybersecurity Industry: A 12-Month Price Surge
Cybersecurity Industry Experiences Significant Growth
Over the past 12 months, the cybersecurity industry has witnessed a remarkable surge in price action, closing at $453 as of today. Investors have shown a willingness to pay a premium for stocks in this space, as evidenced by the collective valuation of these stocks surpassing their actual trading prices. Despite a slight drop in sales growth rate to 23% over the last 12 months, the industry’s growth rate in earnings has increased from 14% a year ago to 15% today. Although the forecasted earnings per share (EPS) for the space remains negative at -$0.32, it has shown improvement from the previous year’s -$0.44.
Top Performers and Undervalued Gems
Among the 47 stocks that comprise the software security space, several stand out as top performers and potentially undervalued gems. Palo Alto Networks (PANW) and CrowdStrike (CRWD) are two well-known names that have received buy ratings and are considered fundamentally sound. However, these stocks are also trading at a significant premium compared to their intrinsic value. On the other hand, companies like OneSpan (OSPN) and Check Point Software Technologies (CHKP) have received high ratings and are currently undervalued, presenting potential opportunities for investors.
Emerging Players with Impressive Growth
While the industry is dominated by established players, several emerging companies have caught the attention of investors due to their impressive growth rates. Clear Secure (YOU) boasts a sales growth rate of 35% and an RV of 1.43, indicating substantial upside potential. Another notable stock is Latch (LTCH), which is currently undervalued and trading at $0.41 with an intrinsic value of $0.57. Latch’s sales growth rate is an astounding 106%, making it an attractive option for growth-oriented investors. Other companies to watch include Absolute Software (ABST) and Cloudflare (NET), both of which have shown promising growth and momentum in recent months.
Premium Picks: Palo Alto, CrowdStrike, and Check Point
Premium Picks: Palo Alto, CrowdStrike, and Check Point
Among the top performers in the cybersecurity industry, Palo Alto Networks (PANW), CrowdStrike (CRWD), and Check Point Software Technologies (CHKP) stand out as premium picks. Palo Alto Networks, currently trading at $317.77, has shown a steady upward trend, with resistance levels around $323. If the stock breaks above this level, there is potential for further growth, with a gap to fill at $362. CrowdStrike, another crowd favorite, has also demonstrated strong momentum, with its moving averages indicating continued upside potential. The stock recently hit a high of $394.64, and if buyers remain in control, it could continue its upward trajectory.
Undervalued Opportunities: OneSpan and Latch
While the premium picks garner much attention, there are also undervalued opportunities within the cybersecurity space. OneSpan (OSPN), currently trading at $12.38, is one such example. Despite the recent pullback, the stock has found support around this level. If buying pressure emerges and the stock maintains its position above the support level, it could present a promising trade setup. Another undervalued gem is Latch (LTCH), trading at just $0.41 with an intrinsic value of $0.57. Latch boasts an impressive sales growth rate of 106% and has shown a remarkable turnaround in recent weeks, with all moving averages now in favor of the bulls.
Emerging Players: Clear Secure, Absolute Software, and Cloudflare
In addition to the established players, several emerging companies in the cybersecurity industry have caught the attention of investors. Clear Secure (YOU), with a sales growth rate of 35% and an RV of 1.43, presents substantial upside potential. Absolute Software (ABST) is another company to watch, with its price action slightly above where it was six months ago and a recent bullish candlestick pattern. If the moving averages remain in favor of the bulls and momentum continues to the upside, Absolute Software could prove to be a lucrative momentum play. Cloudflare (NET), despite experiencing challenges over the past six months, has recently shown signs of a momentum change, with its moving averages now favoring the bulls. For investors comfortable with bottom fishing, Cloudflare may present an attractive opportunity.
Undervalued Gems: OneSpan and Qualys
OneSpan: An Undervalued Opportunity
OneSpan (OSPN) stands out as a potentially undervalued opportunity within the cybersecurity industry. Despite being overshadowed by the more well-known players, OneSpan has received high ratings from analysts and is currently trading below its intrinsic value. With a strong fundamental foundation and a favorable market position, OneSpan presents an attractive option for value-oriented investors seeking exposure to the cybersecurity space.
Qualys: A Hidden Gem with Strong Growth Potential
Another company that has flown under the radar but deserves attention is Qualys (QLYS). Qualys has demonstrated impressive growth rates and has consistently delivered strong financial results. The company’s cloud-based security and compliance solutions have gained traction among enterprises, and its scalable business model positions it well for future growth. As more organizations prioritize cybersecurity and adopt cloud-based solutions, Qualys is poised to benefit from this trend and emerge as a hidden gem within the industry.
Investing in Undervalued Cybersecurity Stocks
For investors looking to capitalize on the growth potential of the cybersecurity industry while mitigating risk, undervalued stocks like OneSpan and Qualys present compelling opportunities. These companies have strong fundamentals, innovative products, and a growing customer base, yet they are trading at a discount to their intrinsic value. By identifying and investing in these undervalued gems, investors can potentially achieve significant returns as the market recognizes their true potential and the stocks appreciate in value over time.
Palo Alto: Trading Range and Resistance Levels
Palo Alto Networks: Consolidating in a Tight Range
Palo Alto Networks (PANW) is currently trading at $317.77, consolidating within a tight trading range over the past several weeks. The stock faces resistance around the $323 level, and a breakout above this zone could lead to a potential gap fill at $362. Despite being significantly overvalued compared to its intrinsic value, Palo Alto Networks has demonstrated a steady upward trend, making it an attractive option for investors seeking exposure to a leading cybersecurity company.
Bullish Momentum and Potential Resistance Levels
As Palo Alto Networks continues to trade within its current range, investors should keep a close eye on key resistance levels. If the stock manages to break above the $323 resistance zone, it could signal a bullish continuation and open up the possibility of further upside. However, it is important to note that the stock is trading at a premium valuation, which may limit its potential for significant near-term gains. Nonetheless, the company’s strong market position and growth prospects make it a compelling long-term investment opportunity.
Earnings Growth and Market Sentiment
Palo Alto Networks has consistently delivered strong financial results, with its earnings per share (EPS) on the rise. This positive earnings growth has contributed to the overall bullish sentiment surrounding the stock. As the company continues to innovate and expand its product offerings, it is well-positioned to capitalize on the growing demand for cybersecurity solutions. Investors should monitor the company’s earnings reports and guidance to gauge its future growth prospects and assess the sustainability of its current valuation premium.
Speculative Plays: Latch and Audiocodes
Latch: An Undervalued Play with Impressive Sales Growth
Latch (LTCH) presents an intriguing opportunity for investors seeking undervalued plays in the cybersecurity space. Despite its current trading price of just $0.41, Latch has an intrinsic value of $0.57, indicating significant upside potential. What sets Latch apart is its remarkable sales growth rate of 106%, which showcases the company’s ability to rapidly expand its market presence and capture market share in the competitive cybersecurity industry.
Audiocodes: A Speculative Play with Strong Momentum
Audiocodes (AUDC) is another speculative play that has caught the attention of investors. Although the stock has experienced a downtrend over the past six months, recent weeks have shown a promising turnaround. The moving averages are now in favor of the bulls, with two consecutive green bullish candlesticks breaking above the consolidation point around $18.46. Audiocodes is currently trading at $18.54, with the next level of resistance coming in at $18.80. If the stock can break above this level, it would confirm the upside trend and potentially attract more buyers.
Evaluating the Risk-Reward Profile of Speculative Plays
When considering speculative plays like Latch and Audiocodes, it is crucial for investors to evaluate the risk-reward profile. While these stocks may offer significant upside potential, they also come with higher levels of risk compared to more established players in the cybersecurity industry. Investors should carefully assess their risk tolerance and investment objectives before allocating capital to these speculative plays. Additionally, it is important to conduct thorough due diligence, analyzing the companies’ financials, market position, and growth prospects to make informed investment decisions.
