Cybersecurity is everything these days. Everyone from credit companies to hotels are desperate to shore up their cybersecurity, and it’s even playing a pivotal role in the U.S.-China trade war. There are a lot of cybersecurity companies out there right now (we’ll talk about three in just a moment), so you’d think that picking a winner would be easy… but you couldn’t be more wrong.
My Portfolio Grader tool will cut through any corporate hype real quick and point you to what matters: 1) fundamentals, and 2) buying pressure (or lack thereof) from big money on Wall Street. So let’s use that to determine which well-known cybersecurity stocks measure up – and which don’t.
With cybersecurity stocks, as with everything else, a big part of success is getting the timing right. For example, in 2009 and 2010, F5 Networks (FFIV) was one of the hottest stocks around – up nearly 560%! Then it had some ups and downs on its way to an all-time high in late 2018.
Now for 2019 to date, it’s down 14%, versus a 20% gain for the rest of the S&P 500.
With a high-quality stock, that would be a great opportunity to go bargain-hunting. But, as you see here, FFIV is not that:
At the end of the day, F5’s sales growth is looking mediocre, as are its cash flow and Analyst Earnings Revisions. It’s not growing operating margins or earnings, either, and has a poor history of Earnings Surprises, so investors should be seriously concerned from a profitability perspective.
And FFIV stock’s Quantitative Grade is downright ugly. It earns an F there, suggesting that institutional cash is fleeing.
FireEye (FEYE) is another major player in cybersecurity, although its heyday was in 2013. Unfortunately, this stock is not measuring up right now, either:
Its Quantitative Grade is a D, reflecting at least slightly better buying pressure on Wall Street, compared to FFIV. But its growth prospects are uninspiring, in terms of sales, operating margins and earnings. In fact, its prospects for earnings season in general are downright bleak, with an F for both Analyst Earnings Revisions and Earnings Surprises.
That brings me to CyberArk Software (CYBR), whose picture is the complete opposite in that regard – making it a Buy-rated stock in Portfolio Grader.
It’s also a stock I follow for Breakthrough Stocks, where we’re up 18% with CYBR in just seven months. I was sure to brief subscribers on CyberArk’s blowout earnings report in early August…in which second-quarter earnings soared 70.4% year-over-year!
Specifically, CYBR’s second-quarter earnings came in at $23 million, or $0.59 per share, up from $13.5 million, or $0.36 per share, in the same quarter a year ago. The analyst community was expecting earnings of $0.47 per share on $97.29 million in revenue, so CyberArk posted a 3% sales surprise and a 25.5% earnings surprise, too.
Here’s the full picture on CYBR:
All in all, CyberArk has strong fundamentals, growing both sales and earnings like a champ. Its Quantitative Grade is even better: It earns an “A” on this proprietary measure of institutional buying pressure, contributing to a total grade of “A” as well.
So, unlike its peers at F5 Networks and FireEye, CYBR is a Strong Buy.
There’s Another Difference, Too
CYBR is a newer stock; while this Israeli credential security company has been around since 1999, its IPO was in late 2014.
It also has room to grow. Its market cap (of just under $4 billion) is less than half of FFIV’s. Plus, it’s an excellent acquisition target.
I believe that CyberArk is the best cybersecurity company out there, which is exactly why I tell my Breakthrough Stocks subscribers to get “locked and loaded” on this stock. If you’re a growth investor – and I certainly am; I’ve made my career this way – then you’ve got to look at elite small-caps like this. With growth statistics like CYBR’s (and my other Breakthrough Stocks), the sky is the limit.
To get my buy price on CYBR – and my list of Top 5 Stocks – check out Breakthrough Stocks now. When you do, you’ll learn all about my “Quantum A” system for identifying the best small-cap investments.
Note: Ultimately, spotting the right investment is simple. You buy when the company achieves a Quantum A …and you sell when it disappears.
You don’t fall in love. You certainly don’t fall for hype. You may return to that stock someday – but with my system, you know exactly when it’s time to take profits off the table.
That’s why I always say: There’s no luck and very little skill behind my own success – just hard work. And the result: a proprietary system for picking the best investments of the day. It’s made it easy to nab market-beating returns – for double your money (or better).
I’m eager to show you what my system is picking up now. Click here to find out more.