According to GrandView Research, the global cybersecurity market will expand at a compound annual growth rate (CAGR) of 12.3% from 2023 to 2030. That’s one reason that, as equities try to mount a comeback in 2023, many investors are looking for cybersecurity stocks to buy. And there is no shortage of names to choose from in this growing sector.
But the words “thrilling” and cybersecurity don’t always go together. Even though some of the leading names, like Palo Alto Networks (NASDAQ:PANW), underperformed vs. the broader market in 2022, they still have a business model that provides consistent revenue. After all, the threat of cybercrime is becoming more sophisticated. That means cybersecurity is a must-have, not a nice-to-have, for businesses of all sizes.
Earnings, however, are a different story. Except for the biggest names, many companies in this sector are deeply unprofitable. This is where the risk, and potential thrill, for cybersecurity stocks really lie.
Some of these companies will fall by the wayside. But history shows investors that there will also be a handful that investors will look back on and wish they had taken this opportunity to start building a position. This article looks at three cybersecurity stocks to buy for aggressive investors looking for market-beating returns.
If you’re an aggressive investor looking to get a thrill from the cybersecurity sector, you can start with Palantir (NYSE:PLTR). The company remains a polarizing stock, with critics pointing out that it took 20 years to post its first profitable quarter.
However, the company has several contracts with the U.S. government that ensures a steady stream of revenue. And Palantir continues to add new clients in the private sector as well. This means that the company’s first profitable quarter will not likely be its last.
On the other hand, institutional ownership of Palantir hovers around 30%, which means that retail investors aren’t getting much help from big-money investors. And further muddling the picture, short interest remains at around 8%.
But if the company can continue to expand its business in both the government and the private sector, this may be a perfect time for investors to start a position. PLTR stock is down 11% since going public via a direct listing in 2020. However, the stock is up 31% as of the end of the first quarter of 2023, yet still remains an inexpensive stock at under $10 a share.
SentinelOne (NYSE:S) provides cloud-based endpoint software security. This means that the company looks to help its customers protect networks that are becoming increasingly remote. Specifically, SentinelOne supplies protection for the PCs, laptops, and mobile devices that need to access a company’s network. The company’s solutions also consider Internet of Things (IoT) devices that are part of the company’s broader network.
Unlike Palantir, SentinelOne is a favorite of institutional investors. S stock enjoys 79% institutional ownership. And that’s due to consistent growth on the top line. But the bottom line is still the question. SentinelOne is still unprofitable. That’s not expected to change before 2026. But analysts are forecasting average earnings growth of over 38% over the next five years.
Nevertheless, S stock trades for under $20 a share, and with the stock down over 57% since going public in 2021, this could be a thrilling option among cybersecurity stocks to buy.
If you’re looking for a real thrill among cybersecurity stocks to buy, aggressive investors may want to keep their eye on Cybeats (OTCMKTS:CYBCF). The Toronto-based company just went public on March 27, 2023, so this is truly a blank slate for many investors.
Cybeats provides cybersecurity and software supply chain management through its SBOM Studio platform. SBOM stands for Software Bill of Materials, and Cybeats describes its SCOM Studio as “the most comprehensive management solution to collect, store and distribute SBOMs at scale.”
Cybeats is a pioneer in this sector, which is getting a boost from a White House Executive Order and FDA mandates for medical device companies. The company launches its SBOM studio in May 2022 and already has several Fortune 500 clients in various sectors.
But investors should take note. For now, this is still an over-the-counter (OTC) stock. Some trading platforms will not allow investors to buy, sell, or trade OTC stocks, so you may have to shop around if you’re interested in CYBCF stock. But that effort may be rewarded as the stock wouldn’t have to climb that much to provide an impressive gain.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.