Cybersecurity stocks are generating that much more attention as we rapidly transition to a high-tech society in which the Internet of Things (IoT) is ubiquitous. Fast forward a decade into the future, and nearly everything we rely on for living and working will likely be connected to the web in some way.
Enter the cybersecurity businesses. These companies will inevitably enjoy an uptick in revenue in the years and decades ahead, especially as international hacking takes center stage.
Take a close look at the cybersecurity businesses that are publicly traded, and you will find two that stand out: Cloudflare (NET) and NortonLifeLock (NLOK). Let's take a look at each of these stocks to gauge the better play moving forward.
Cloudflare (NET)
NET's platform safeguards and accelerates web applications without using code alterations, the installation of software, or any hardware. Part of what makes NET so unique is the company's cybersecurity services are provided via the cloud through edge computing. This approach guards against cybersecurity attacks, ultimately empowering the company to handle more than 600 million internet queries daily. NET's edge computing has access points spread out across 200 cities in the United States and elsewhere.
NET is a POWR Ratings disappointment with an overall grade of D, which translates into a Sell rating. The stock has a grade of F for the Value component and grades of D in the Sentiment and Stability components. You can find out how NET fares in the rest of the components such as Quality, Momentum, and Growth by clicking here. Out of the 24 stocks in the Software - Security industry, NET is ranked 22nd. Click here to find other top stocks in this industry.
Analysts view NET as slightly underpriced, setting an average target price about 3% higher than where the stock is currently priced. NET's average price target has climbed an impressive $68.16 in the past 13 months.
Click here to check out our Cybersecurity Industry Report for 2021
NortonLifeLock (NLOK)
NLOK has provided cybersecurity and digital security solutions going back to the early 1980s. The stock is currently priced around $28, equating to a forward P/E ratio of 16.42. This is an attractive ratio, especially when you factor in NLOK is priced only a dollar away from its 52-week high of $28.92. The stock's 52-week low is $17.98.
NLOK is a POWR Ratings success with an overall grade of B, which is a Buy rating. The stock has a grade of A in the Quality component and grades of B in the Value and Growth components. If you are curious as to how NLOK fares in the Momentum, Stability, and Sentiment components, you can find out by clicking here.
NLOK is ranked first out of 24 publicly traded companies in the Software - Security industry. Nine analysts rate the stock as a Buy.
Which is the Better Buy?
NLOK is the better of these two. NLOK is ranked first out of two dozen stocks in its industry. Alternatively, NET is ranked third-last in the industry. NLOK is also the better investment as it has superior grades in the POWR Ratings. Though NET has a couple of decent POWR Rating component grades, the stock is not in the same class as NLOK. If you want to add a cybersecurity stock to your portfolio, NLOK is clearly a better addition than NET.
NET shares were trading at $100.82 per share on Friday morning, up $0.13 (+0.13%). Year-to-date, NET has gained 32.68%, versus a 12.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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