In today’s digital age, cyber threats are everywhere, and their impact can be devastating.
Due to these circumstances, cybersecurity has become a top priority for individuals and businesses alike since a single breach can lead to reputational damage, financial loss, and even legal repercussions.
And with cyber attacks growing more frequent, demand for ultra-secure cyber systems is growing increasingly important.
Fortunately, this rapid growth in the cybersecurity industry presents a wonderful opportunity for investors to capitalize on this emerging sector in the stock market.
As more businesses and individuals become aware of the need for digital security, the demand for cybersecurity solutions will only expand further.
In this article, we’ll break down the cybersecurity industry, how to invest in it, and what cybersecurity
If you want to take advantage of this tremendous opportunity in the cybersecurity sector, then check out what we have in store.
Top Cyber Security
Penny Stocks at a Glance
What are Cybersecurity Stocks?
The cybersecurity industry is a diverse and rapidly evolving field that encompasses a wide range of technologies and companies that aim to protect computer networks, devices, and data from a variety of cyber threats.
In general, cybersecurity solutions are designed to prevent unauthorized access, theft, damage, and disruption of data and systems.
Some of the most common cybersecurity solutions include firewalls, which protect computer networks from external threats by blocking unauthorized traffic; antivirus software, which scans devices for malicious software and viruses; and encryption, which encodes sensitive data to prevent unauthorized access.
What’s more, artificial intelligence and machine learning are becoming increasingly adopted technologies, used to enhance threat detection systems and for preventing cyberattacks.
Not only that, but cybersecurity is valuable for preventing insider threats, such as employee negligence, as well.
So, with the broad market explanation covered, let’s explore why you should consider investing in cybersecurity stocks.
Why Invest in Cybersecurity Stocks?
Investing in cybersecurity tech
Here are a few of the biggest reasons why an investor should own cybersecurity stocks.
A Sustainable Growth Industry
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With society continuing to trend toward a digital-based ecosystem, the need for cybersecurity is becoming increasingly important.
This is reflected by the plethora of industries and software companies that have emerged in recent years including e-commerce, cloud computing, artificial intelligence, fintech, and more.
Unless we plan to make our smartphones, laptops, bank accounts, and any other digital platform vulnerable to hackers, it is more than likely that we will require some form of cyber protection on every device that we own or operate.
As such, the global cybersecurity market is expected to reach $424.97 billion by 2030, growing at a compound annual growth rate of 13.8%.
And with the demand for remote work increasing and new technologies being invented all the time, it is likely this market will expand even more in the future.
The Threat of Cyberattacks is Increasing
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With emerging technologies comes increasingly complex cyberattacks as well.
According to Statista, the cost of cybercrimes is expected to reach $23.84 trillion annually by 2027.
This implies an increase of 44.63% annually and is up from just $860 billion in 2018.
Alarmingly, cybercrimes are becoming a major threat to society, challenging the way we live and operate today.
Ironically, this provides us investors with a major opportunity, given that cybercrimes ultimately drive more demand for cybersecurity services.
So, even though hackers and cybercrime may be a pain in the butt to deal with, on the bright side, you may be able to profit handsomely from the enterprises that attempt to counteract it.
Favorable Government Regulations
At an even more extreme level, cyberwarfare is becoming a growing concern for government entities everywhere.
As a result, favorable regulations like the European Union’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CCPA) are requiring businesses to adopt adequate cybersecurity measures to protect personal data.
In turn, this is driving demand even higher as public and private organizations, and households seek to ensure that their sensitive information is properly protected and secured.
With global tensions rising and technology advancing at an exponential rate, this is sure to become an even more important issue in the coming years.
Penny Stocks to Buy
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Despite quite a significant fall from its all-time highs, don’t overlook this tech stock.
Turkcell is a leading telecommunications and technology company based in Turkey that provides a variety of value-add services in the mobile, fixed-line, and broadband sectors.
These include digital services, payment systems, and enterprise solutions.
To complement this, Turkcell built a comprehensive cybersecurity program to identify and mitigate potential threats, with a focus on proactive monitoring, threat intelligence, and incident response.
The company works closely with government agencies, industry partners, and cybersecurity experts to develop and implement best practices and standards for protecting its networks and customers.
What makes Turkcell a worthy option in the cybersecurity market is its strong brand reputation and loyal customer base.
Through its comprehensive network infrastructure and a wide range of mobile services, Turkcell has earned the trust of its customers, allowing it to be the go-to business for telecommunication needs.
On top of that, the company has established many strategic partnerships with leading tech companies, which has allowed it to stay ahead of the competition through innovation and cutting-edge technology.
That being said, an investor should pay attention to its declining revenues and profits over the years.
While it still earned $227.05 million in profits and $1.69 billion in revenue in the TTM, Turkcell has experienced a slow and steady decline over the past decade.
One reason that this could be happening is that the company is attempting to focus on high-value segments, rather than spreading its operations too broadly.
This is reflected by the solid return on equity (ROE) of 46.82% achieved over the trailing twelve months.
However, one should remain cautious about investing in a company that is contracting instead of expanding because it may be a sign that Turkcell is losing its competitive edge in the marketplace.
Overall, it is safe to say that Turkcell is an interesting pick and a higher-quality stock, but it may not be the best option.
Brady Corporation (BRC)
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Next up is Brady Corporation, a global manufacturer and supplier of identification and safety solutions for workplace environments.
Through its software products, the company offers a variety of security solutions that help its customers tackle cybersecurity challenges, including asset management and identification, access control, and data protection.
To ensure that its customers receive quality protection, Brady has built a top-notch cybersecurity program that focuses on securing its networks, applications, and devices.
This in turn has allowed it to develop a strong reputation for quality and reliability across a multitude of industries.
And with a global presence that spans over 50 countries, Brady is now one of the top players in the global identification and safety solutions market.
Financially speaking, Brady Corporation is in a solid position posting revenue above $1.1 billion almost every year, with current TTM sales at $1.33 billion.
What’s more, the company has been growing its profits in recent years, achieving a net income of $174.09 million in the TTM.
As result, Brady reached an ROE of 18.39% and an operating margin of 17.94% over the trailing twelve months.
One thing to keep in mind if you plan to invest in this company is its dependence on a few key industries for its revenue, such as electronics, aerospace, and defense.
If there are any disruptions in these markets then you may see Brady’s profits turn into losses as they did in the years 2012 to 2014.
But, all-in-all, the Brady Corporation is a solid play offering investors a predictable business to invest in.
Coming in third on our list is CSP Inc, a technology solutions business providing a range of products and services, including managed IT services, cybersecurity solutions, and high-performance computing solutions.
In regards to cybersecurity, CSP’s solutions help organizations protect their data and networks from cyber threats, including managed security services, threat detection and response, and compliance management.
Moreover, the company offers consulting services to help organizations identify and address cybersecurity risks and vulnerabilities.
CSP’s competitive advantages are largely associated with its strong focus on innovation and cutting-edge technology.
With a diverse range of products and services, the company offers advanced technology solutions that are capable of combating modern cybersecurity threats.
As a result, CSP has established long-term relationships and a loyal customer base that is bound to be profitable for many years to come.
While the company was profitable in the TTM with a net income of $4.90 million, CSP has struggled to progress its profit potential overall.
And with declining revenues since 2016, it is difficult to tell if it has what it takes to be a worthy investment.
That being said, it is certainly more promising than many of the cybersecurity penny stock companies out there.
If you plan to invest, make sure you take the time to understand why this business has struggled to improve its sales.
Otherwise, it may end up costing you dearly.
Mitek Systems (MITK)
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An interesting pick, Mitek Systems is a software solutions company that provides mobile capture and identity verification solutions for businesses.
The cybersecurity company uses advanced artificial intelligence and machine learning algorithms to help businesses verify the identity of their customers securely.
This allows them to prevent fraud and protect sensitive data, such as financial and personal information.
Mitek designs its professional services to be highly secure, with multi-layered security features such as biometric authentication, encryption, and fraud detection algorithms.
On top of that, the company has a team of cybersecurity experts who monitor threats and ensure that its solutions are up-to-date and protected against the latest threats.
Through its proprietary technology platform, Mitek has built a durable competitive advantage that is highly secure, reliable, and scalable, making it suitable for businesses of all sizes.
This allows it to serve a wide range of customers no matter how big the business is or what their specific needs are.
In addition, the company has a strong network of industry partners that enable it to reach new markets and customers and collaborate on research and development.
As such, Mitek has been able to strengthen its reputation internationally and find solutions that satisfy the needs of a variety of unique markets.
From a financial standpoint, Mitek is one of the best cybersecurity stocks given that it has been able to demonstrate consistent revenue growth over the past decade.
Even though its earnings performance has not been as strong, suffering a few losing years along the way, one can argue that it is experiencing its best years financially as we speak.
This is reflected by Mitek earning $173.66 million in revenue and $9.16 million in profits over the trailing twelve months.
If we were to offer one hesitation, it would be that the company is trading at a relatively high P/E ratio of 53.20.
So, for the time being, as we wait for the price to fall a little, the best thing one can do is continue to study up and ensure that Mitek Systems is a business you would be confident holding for at least a few years.
If not, it is best to move on to the next one.
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Taking the last spot on our list is Radware, a leader in cybersecurity and application delivery solutions.
Radware offers its customers a variety of cybersecurity services including distributed denial of service (DDoS) protection, web application firewalls, and cloud security.
These solutions are designed to help businesses secure their networks, applications, and data against cyber threats and attacks.
One of the neat things about Radware is that it uses advanced technologies like machine learning and artificial intelligence to detect and mitigate cyber threats in real-time.
Not only does this help mitigate the impact of cyberattacks, but it also allows Radware to do more business at a fraction of the cost.
As such, the company has been able to build a global presence and solid relationships with its customers.
For their efforts, Radware has been able to consistently grow its revenue, earning over $270.34 million in the TTM.
Interestingly, its profits have been trending in the opposite direction with it posting its first loss in five years.
That being said, the company has a relatively strong balance sheet with over $321.74 million cash on hand and a measly $20.39 million in debt, as of this recent quarter.
Similar to many of the companies on this list, an investor should pay close attention to the reasons why a business might be struggling to improve its earnings potential.
In this case, Radware may be struggling due to the highly competitive nature of this market and the larger players it must directly compete against.
If the company is unable to differentiate itself or develop a firm position in this market, then it may fail to achieve the growth that investors hope for.
All-in-all, Radware is a decent pick but it will need to demonstrate greater success before it can be considered a worthwhile investment.
Our Methodology: How to Choose the Right Cybersecurity
Like many of the stocks we analyze, choosing the right cybersecurity penny stock largely depends on the company’s financial position, competitive advantages, management team, and price.
In the case of those companies excluded from our list, many cybersecurity stocks failed to demonstrate the strong financial performance we typically desire in an investment.
As such, we put a heavy emphasis on the financial strength of a company, given that it is one of the best indicators of a stock’s performance over the long run.
When looking at each stock, we considered its operating margins, return on equity, revenues, earnings, cash on hand, debt, and more.
In the end, we determined that the higher-quality cybersecurity
With that being said, it is always important to do your research so that you can confident and comfortable with your investment.
Alternatives to Investing in Individual Companies
The cybersecurity market continues to experience rapid growth and presents a range of exciting opportunities for investors looking to capitalize.
While there are many established players in this market, an investor may be able to take advantage of higher growth opportunities by investing in cybersecurity
However, if you do plan on exploring these penny stocks, we recommend that you carefully consider each company’s competitive advantages and weaknesses, as well as any market trends or regulatory factors that could impact the success of the investment.
Ultimately with any investment you make, it is a good idea to conduct thorough research so that you can be comfortable with anything that the market throws at you.
After all, it is your
Therefore, focus on buying only the best stocks and holding them for the long run.
If you do, the opportunities to succeed as an investor are endless.