This month’s list of new purchases by the top mutual funds shows that savvy investors are looking to invest in cybersecurity stocks. CrowdStrike (CRWD), Palo Alto Networks (PANW) and CyberArk Software (CYBR) have all made it to this screen. And now CrowdStrike, Palo Alto and CyberArk stocks are leading a new brigade of breakouts.
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Monthly Market Report with Jim Roppel and Alissa Coram: June 2024
CyberArk Leads Top-Rated Cybersecurity Stocks
The ubiquity of cloud-based networks and the ever-increasing tsunami of artificial intelligence are creating security risks for businesses large and small — and demand for leading cybersecurity stocks.
With the highest possible 99 Composite Rating, CyberArk beats CrowdStrike and Palo Alto Networks to become the leader in the cybersecurity category. Gen Digital (GEN), which also features on the latest list of best investment funds, is just behind its competitors with a still strong rating of 96.
Additionally, each of these four cybersecurity leaders receives an Accumulation/Distribution Rating of B- or higher, indicating solid buying by institutional investors over the past 13 weeks.
In another sign of leading demand, CyberArk outpaces its peers with a strong 2.1 up/down volume ratio. On that metric, anything above 1.0 points to demand.
Palo Alto Networks and Gen Digital both have a 1.5 up/down volume ratio. CrowdStrike comes in below the 1.0 mark at 0.8.
| Company | Symbol | Comp rating | EPS classification | RS classification | SMR classification | A/D classification |
|---|---|---|---|---|---|---|
| CyberArk Software | (CYBR-) | 99 | 82 | 94 | B | B |
| CrowdStrike | (CRWD) | 98 | 99 | 98 | a | B |
| Palo Alto Networks | (PANW-) | 98 | 97 | 92 | a | B- |
| Gen Digital | (GENE) | 96 | 92 | 89 | a | B |
CyberArk moves ‘fearlessly forward’ – with a human approach
CyberArk, based in Israel, focuses on identity security. The company focuses on privileged access accounts.
Such accounts have access to administrative tasks and other highly sensitive areas within an organization. CyberArk claims to offer the most comprehensive security offering for any identity — human or machine — across enterprise applications, distributed workforces, and hybrid cloud environments.
Companies ranging from networking giants Cisco systems (CSCO) to video game maker Capcom to use CyberArk to protect critical assets.
Meanwhile, CyberArk last month released a video series called “Fearlessly Forward.” The series focuses on the people behind cybersecurity and the human connections being forged to keep organizations safe in a cloud-based, always-connected world where potential identity-based breaches are a constant threat. The first episode features health insurers Aflac (AFL), a CyberArk customer since 2014.
Earnings growth of 1,223% predicted
CyberArk’s revenue growth has ranged from 24% to 37% over the past five quarters. On May 2, the company posted a third straight quarter of accelerated revenue growth, to $221.6 million, a 37% jump from the year-ago quarter.
On the earnings front, the cybersecurity company has seen a sharp turnaround in recent quarters. After declining earnings in 2022, CyberArk posted a 355% increase in earnings to $1.12 per share in 2023.
Analysts expect full-year earnings to rise 81% to $2.03 per share, followed by a 61% rise to $3.26 per share in 2025.
For the first quarter of 2024, the company posted earnings of 75 cents per share, a reversal from the loss in the year-ago quarter. With second-quarter earnings expected in early August, Wall Street is predicting a whopping 1,223% jump to 40 cents per share.
Two Magnificent Seven Shares Compete For Two Crowns. One Takes Both.
CYBR Stocks Near Breakout to All-Time High
CyberArk has formed a second phase consolidation showing a 283 buy point. In a sign of increasing technical strength, both the 50-day moving average and the relative strength line have moved higher. Additionally, the 21-day exponential moving average has crossed back above the 50-day line.
A breakout would send CyberArk shares to a record high.
Meanwhile, CrowdStrike stock has formed a series of tight weeks after gapping up to pass a 358.84 buy point in a cup with handle in June. The tight area could provide investors with an opportunity to add to shares.
Palo Alto Networks continues to rebuild after a sharp drop below its 10-week line in February. But after a series of rising weeks, Palo Alto stock has moved firmly back above that benchmark line, which has moved higher. The relative strength line has also improved.
Follow Matthew Galgani on X (formerly Twitter) on @IBD_MGalgani.
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