Cybersecurity Stocks Are Outperforming, But There Are Risks – Forbes
UKRAINE – 2021/05/18: In this photo illustration the Okta logo of an IT service management company … [+]
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Our theme of Cyber Security Stocks has outperformed considerably, rising by about 51% year to date, compared to the S&P 500 which remains up by about 26% over the same period. There has been rising interest in cybersecurity following the Covid-19 pandemic, as companies looked to secure their increasingly distributed operations with more employees working from home. Moreover, multiple high-profile cyber attacks in recent months have also made companies prioritize their security spending. For perspective, the companies in our theme grew revenue at a compounded annual rate of around 34% over the last three years, compared to the S&P 500 companies, which grew revenue at under 5% each year over the same period.
That said, there are some risks. Most of the stocks in our theme are high-multiple names, and prices can be volatile and highly sensitive to quarterly growth rates. Moreover, with inflation in the U.S. soaring to multi-year highs, there is a real possibility that we could see sooner than expected rate hikes by the Federal Reserve, and this could also hurt these stocks in the near term.
Within our theme, Fortinet, a company that provides cybersecurity-related hardware such as firewalls and software, has been the strongest performer, rising by about 124% year-to-date on account of stronger than expected quarterly results and its ongoing pivot to the cloud. The stock is also up by over 3x from pre-Covid levels. On the other side, the stock price for Okta, an identity, and access management company, has declined by about 12% year-to-date.
[8/6/2021] Why Cyber Security Stocks Have Rallied Over The Last Month
Our theme of Cyber Security Stocks has gained a solid 6% over the last month and remains up by about 22% year-to-date. In comparison, the broader Nasdaq-100
NDAQ
has returned about 18% over the same period. The recent outperformance comes on the back of a renewed interest in the cybersecurity space following several high-profile cyberattacks, including the recent attack on software company Kaseya and the ransomware attack on …….