The coronavirus pandemic caused companies, schools, and other organizations to think more carefully about cybersecurity as we were all forced to work, learn and play from home. During that time, cybersecurity threats exploded, with the FBI reporting a 400% increase in incidents from pre-pandemic levels.
This all underlines the role and importance of cybersecurity companies in making the internet safer. It also throws up unique opportunities to invest in the firms involved in this space, and it may not be too late to do so because cybersecurity threats won’t go away when the Covid-19 pandamic is brought under control.
Where Can I Trade Cybersecurity Stocks?
There are several ways to invest in cybersecurity stocks: via a Direct Stock Purchase Plan (DSPP), via a robot adviser, or by buying an exchange-traded fund (ETF) that includes cybersecurity stocks. In this guide, we focus on buying single cybersecurity stocks via a stockbroker, and we’ve identified some of the best brokers for this purpose.
What Are Cybersecurity Shares?
The most common cyber attacks in 2020 included ransomware attacks, phishing, data leaks, breaches, and supply chain attacks. All these threats come with an ever-increasing sophistication; even Twitter was a victim of a security breach last year that compromised several prominent celebrity accounts.
Cybersecurity firms help thwart these threats. They provide proactive defense mechanisms against malicious attacks so that companies, schools, and other institutions can safely continue with their regular activities.
Cybersecurity companies' stock prices are tied to how effective they are at protecting their clients.
How to Trade and Invest in Cybersecurity Shares?
Open a Trading Account
First, create an account with an online broker, which means filling out a form (with your name, address, email address, etc.) and uploading any required identification documentation.
Next, select the cybersecurity stocks you wish to buy from the list of stocks provided by the broker. Use our list of suggested stocks as a guide but be sure to back this up with your own research.
Place Your Trade
Finally, click any of the stocks in the broker’s list to see more information (including a price chart) and to open a trading ticket. Enter the amount of money you wish to invest or the number of shares you wish to buy into the trading ticket and press the “buy” button.
Top 10 Cybersecurity Shares to Trade
We’ve identified ten of the best cybersecurity stocks to trade, and listed them here. We then go into greater detail for five of them.
- Palo Alto Networks (NYSE: PANW)
- NortonLifeLock (NASDAQ: NLOK)
- CrowdStrike (NASDAQ: CRWD)
- Cloudflare (NYSE: NET)
- Proofpoint (NASDAQ: PEPT)
- Verisign (NASDAQ: VRSN)
- Ping Identity Holding Corp (NYSE: PING)
- Okta Inc. (NASDAQ: OKTA)
- CyberArk Software (NASDAQ :CYBR)
- Dynatrace (NASDAQ: DT)
1. Palo Alto Networks (NYSE: PANW)
Palo Alto Networks is one of the world's largest cybersecurity firms. The company has a diverse product lineup that includes firewall appliances, software, and the Panorama security management solution for appliance control. Since 2018, the company has racked up more than $2 billion in profits but is yet to deliver sufficient growth in terms of profitability.
In mid-June 2021, the Palo Alto Networks share price is near the all-time high price it reached in February. Since it’s fallen back a bit, there may be an opportunity to buy on the dip.
2. NortonLifeLock (NASDAQ: NLOK)
NortonLifeLock is best known for its security subscription services for computers and mobile devices that protect against viruses, malware, ransomware, adware, and other threats. The company has been profitable since 2018 but witnessed a 40% revenue drop between 2019 and 2020. Analysts believe that the company should see an increase in sales in the 2021 fiscal year due to its strong customer base.
Having almost halved in the first few months of 2020, shares have rallied in May and June 2021.
3. CrowdStrike (NASDAQ: CRWD)
CrowdStrike is a leader in the endpoint protection platform (EPP) space. It also provides real time threat intelligence and cyber-attack response services. The company offers its cybersecurity solutions to clients in the USA, Australia, India, Germany, Romania, and the UK. It was also involved in high-profile investigations, including the Sony Pictures hack in 2014, the cyber-attacks on Democratic National Committee (DNC) in 2015-16, and the DNC email leak in 2016.
Having hit a high price in February 2021, Crowdstrike shares fell back before recouping almost all of the lost share price by June.
4. Cloudflare (NYSE: NET)
Cloudflare is a website performance and security company that provides cloud security solutions. Its offerings include cloud firewall, bot management, distributed denial of service, infrastructure protection, IoT, SSL/TLS, secure origin connection, and rate limiting.
The Cloudflare share price has risen more than fivefold since its IPO in 2019.
5. Proofpoint (NASDAQ: PEPT)
Proofpoint is a provider of enterprise software solutions that offers its products via a security-as-a-service platform. It helps large and mid-sized organisations defend, protect, archive, and oversee their sensitive data.
Proofpoint’s revenue reached $1 billion last year and its stock price has risen continuously since 2012, hitting an all-time high price in June 2021.
Expert Tip on Investing in Cybersecurity Shares“ Because of how the industry is structured — with rapidly doubling or tripling sales growth, high cash burn rates, and intense competition — cybersecurity stocks may trade with higher-than-average volatility. New traders should therefore diversify their holdings and practice money management techniques such as not investing more than 2% of available funds in any single stock. ”- Ron Mendoza
Why Invest in Cybersecurity Shares?
Prior to 2020, the cybersecurity market size was expected to expand at a compounded annual growth rate (CAGR) of 10%. The Covid-19 pandemic caused this figure to jump to 16.1%. With an increased emphasis on remote workplaces, cybersecurity shares could become popular in the future, even in the post-pandemic period.
Investment in cybersecurity stocks could carry great upside potential and generate considerable returns in the next five years. Although we have identified some of the best cybersecurity stocks in this guide, investors should diversify without and outside the sector so that they’re not dependent on the success of any single stock.
Frequently Asked Questions
Yes. Most reputed platforms will insist on identity verification as part of the “know your customer” (KYC) procedure. This is to ensure a safe and secure environment for the users and protect the platform from bad actors.
Yes. Most countries consider profits generated from share trading as a taxable event. Check your local tax regulations before trading in shares.
Never allocate more than 2% of your investible funds to a single stock, and consider setting a protective stop order to sell your shares if the price starts to go against you. Above all, never invest with money you might need in the immediate future.
Due to the potential volatility, cybersecurity shares might not be ideal for beginners except as part of a well-diversified portfolio.
The topic of cybersecurity became more prominent in 2020 as people were encouraged to work, learn, and play from home during the coronavirus pandemic.
No. Cybersecurity shares are traded during market hours, which are 8 am to 4.30 pm (UK time) for the London Stock Exchange and similar times (in Eastern Time) for the New York Stock Exchange and Nasdaq.