Cybersecurity Industry In 2021: The Complete Investors Guide

Proofpoint Inc. (PFPT)

PFPT is security as a service provider, targeting large and mid-sized organizations to defend, archive, and organize their sensitive data. It offers protection against threats, email security, cloud security, threat detection, and it offers solutions to enable secure communication. 

Many expected that PFPT’s 2020 results would be negatively impacted by weakness in small and mid-sized businesses. However, the company was able to continue growing earnings by 30% and revenue by 17%. It also projects average revenue growth of 15% over the next five years.

This makes the stock quite attractive especially given its PS of 6, which is below its peers. Additionally, the need for IT and email security is only going to expand in the coming years, and PFPT is one of the leading firms in this category. Email security is one of the largest markets with an estimated billion users, while remaining relatively untapped. However, this is also one of the biggest points of vulnerability.

PFPT has an overall rating of B according to the POWR Ratings. This translates to a Buy rating. Proofpoint also has a B grade for Momentum. This is not surprising given that the stock has demonstrated relative strength across multiple timeframes and is on the verge of breaking out to new highs. It also has a B for Sentiment, which indicates there’s still room for the stock to move higher.

Norton Lifelock Inc. (NLOK)

NLOK sells cybersecurity, subscription-based products geared towards the consumer market. Its most well-known offerings are its antivirus and network security programs, identity theft protection, and VPNs for online privacy. 

NLOK has a very attractive valuation with a forward PE of 12, which is almost half that of the S&P 500. Unlike many cybersecurity stocks, NLOK is more of a value stock given its multiples and low growth rate. Yet, it’s likely that the market environment could be more favorable for value stocks given the strength in long-term rates. This could lead to considerable multiple expansions for NLOK due to its 85% gross margins.

NLOK is rated a B by the POWR Ratings, which equates to a Buy rating. The stock has a Quality grade of A. This is consistent with NLOK's reputation as the premiere tool for consumers to protect their identities. Its management team also has a sterling reputation in terms of consistent earnings growth and operational performance.

NLOK is in the Software – Security group. In addition to Quality and Industry, NLOK is also assessed by Value, Growth, Stability, Sentiment, and Momentum. To learn more about these ratings, click here.

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