Not many people would dispute the importance of cybersecurity in organizations. Cyberattacks are up over 500% since the start of the COVID-19 pandemic. Cybersecurity is extremely difficult because it is fluid, and cybercriminals are constantly finding new and creative ways to breach systems. In 2021, there were 50% more cybercrimes per week on corporate networks versus 2020. The trend is not slowing down, and I believe cybersecurity stocks are excellent long-term investments.
Examples of cyberattacks include:
- Phishing attacks: A form of social engineering designed to trick someone to reveal sensitive information or deploy malicious software such as ransomware or malware.
- DDoS attacks: A distributed denial-of-service (DDoS) attack is designed to interrupt normal traffic to a specific server, network, or service, generally by attempting to overwhelm the network by flooding it with traffic.
Cloudflare's (NYSE: NET) mission is to help "build a better internet." Cloudflare is actually a network. In fact, it's one of the larger networks on the planet. Cloudflare enables a faster and more secure internet for anyone with an internet presence. Cloudflare has data centers across the globe, and it boasts an astonishing 25 million internet properties, a number that grows daily. To date, Cloudflare handles over 17% of Fortune 1000 internet requests, and the company handles 25 million HTTP requests every second on average. Cloudflare is the world's best DDoS mitigation platform, and it helps prevent the DDoS attacks mentioned above.
CrowdStrike (NASDAQ: CRWD) is the leader in endpoint security. CrowdStrike's Falcon platform stops breaches through both prevention and response. It uses agent-based sensors that can be installed on Mac, Linux, and Windows. CrowdStrike relies on a cloud-hosted SaaS platform that manages data and prevents, detects, and responds to threats. Both malware and non-malware attacks are covered via CrowdStrike's cloud-delivered technologies in a lightweight solution. CrowdStrike recently added extended detection and response (XDR) to its arsenal, which consolidates threat visibility, provides hassle-free detections and investigation, and provides end-to-end orchestration and response. CrowdStrike is best-of-breed for endpoint security and response, and it deserves a spot on the top 10 list of cybersecurity stocks.
Companies spend billions of dollars annually protecting data from breaches and phishing schemes. With that said, cybersecurity awareness training generally does not come to mind as an important piece of the solution. I find this odd, especially since 95% of all breaches are made possible due to human error. KnowBe4 (NASDAQ: KNBE), a security awareness training company that simulates phishing attacks to educate employees and prevent social engineering cybercrime, can help solve this problem. KnowBe4 is an extremely scalable solution that focuses on an underpenetrated market within the cybersecurity universe, the human layer. The company leverages machine learning and artificial intelligence to create automated training campaigns with detailed reporting and analytics for decision makers.
In the video below, I break down the cybersecurity ecosystem and provide seven additional stock picks.
*Stock prices used in the below video were during the trading day of March 22, 2022. The video was published on March 22, 2022.
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Eric Cuka owns Cloudflare, Inc., CrowdStrike Holdings, Inc., Datadog, KnowBe4, Inc., Microsoft, Palantir Technologies Inc., SentinelOne, Inc., WisdomTree Trust-WisdomTree Cybersecurity Fund, and Zscaler. The Motley Fool owns and recommends Activision Blizzard, Cloudflare, Inc., CrowdStrike Holdings, Inc., Datadog, Microsoft, Palantir Technologies Inc., Palo Alto Networks, and Zscaler. The Motley Fool recommends Broadcom Ltd and Fortinet. The Motley Fool has a disclosure policy. Eric is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
