7 Best-Performing Cybersecurity Stocks as of September 2024
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In the early hours of July 19, cybersecurity company CrowdStrike (CRWD) published a faulty software update that temporarily disabled more than 8.5 million PCs that use its services.
The outage caused chaos across banking, airlines, health care and several other industries, and it sent CrowdStrike shares plummeting more than 20% over the following two trading days.
It also drew attention to the importance of reliable cybersecurity companies — and to the potential volatility of cybersecurity stocks.
What are cybersecurity stocks?
Cybersecurity stocks are shares of publicly-traded companies that protect computer systems from digital threats.
Some, such as CrowdStrike, Fortinet and Palo Alto Networks, are completely focused on cybersecurity, while others, such as Datadog, Cisco, Broadcom and Dell, are diversified technology companies that provide cybersecurity services along with other offerings.
How do major glitches and cyberattacks affect cybersecurity stocks?
According to Roosevelt Bowman, an investment strategist with Bernstein Private Wealth Management, the effect of major technical outages on cybersecurity companies is hard to predict. “It’s not often that you see a single event ‘doom’ a company,” Bowman says. However, he described two ways in which a bad-news event such as an outage can push down a stock’s price in the long term.
The first is if the event in question pushes down a company’s expected future earnings to a point where it looks too expensive at its current price.
The second way in which a scandal such as a technical outage can hurt the long-term trajectory of a stock, according to Bowman, is if there are “subsequent failures.” CrowdStrike’s software has been linked with minor computer outages before, although it has never experienced an outage on the scale of the July 19 incident. Only time will tell if it can rebuild its reputation from here.
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7 best-performing cybersecurity stocks as of September 2024
Below are the seven best-performing stocks in the Nasdaq CTA Cybersecurity Index that trade on major U.S. exchanges, ranked by one-year performance.
Ticker | Company | Performance (Year) |
|---|---|---|
AVGO | Broadcom Inc | 110.86% |
VRNS | Varonis Systems Inc | 86.41% |
CRWD | Crowdstrike Holdings Inc | 77.86% |
LDOS | Leidos Holdings Inc | 73.32% |
CYBR | CyberArk Software Ltd | 69.90% |
S | SentinelOne Inc | 53.40% |
PANW | Palo Alto Networks Inc | 49.95% |
Source: Finviz. Data is current as of Sep. 24, 2024, and for informational purposes only.
How to buy cybersecurity stocks or cybersecurity ETFs
Bowman says that his firm is “following” cybersecurity stocks, in light of the rising volume of consumer data that needs to be protected from threats. He notes that the shift from in-person shopping to online shopping over the last decade has created “opportunity” for the industry.
You’ll need a brokerage account to buy cybersecurity stocks — and you’ll also need to choose between buying individual cybersecurity stocks, like the ones shown in the tables above, or cybersecurity exchange-traded funds (ETFs).
There are four cybersecurity ETFs with at least $500 million in assets on the market today. They’re listed below in order of one-year performance.
Ticker | Fund name | Performance (Year) |
|---|---|---|
HACK | Amplify Cybersecurity ETF | 33.78% |
CIBR | First Trust NASDAQ Cybersecurity ETF | 31.28% |
IHAK | iShares Cybersecurity and Tech ETF | 26.88% |
BUG | Global X Cybersecurity ETF | 26.38% |
Source: Finviz. Data is current as of Sep. 24, 2024, and for informational purposes only.
Each of these ETFs gives investors exposure to dozens of cybersecurity stocks with a single purchase.
However, it’s still important to research an ETF, just as you’d research stocks, before buying. Check out a fund’s fees and holdings to make sure it’s a good match for your portfolio.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
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