Finance
3 Cybersecurity Stocks to Buy and Hold for the Next Decade
Cybersecurity will be an essential part of the future digital economy. Companies are financially incentivized to use the best security tools to protect their data and systems. Did you know that the average breach can cost a company nearly $4.5 million? This is evident from an annual survey IBM.
However, older products such as antivirus software often no longer work. That’s where next-generation solutions come into the picture. Investors have several cybersecurity stocks to choose from, but after some due diligence, three emerged as potential long-term winners.
Here are the three cybersecurity stocks to buy and hold for the next decade.
1. Palo Alto Networks
The firewall has been critical to security for years, and that’s true Palo Alto Networks (NASDAQ: PANW) specialized. A firewall is a type of security detail at a party that checks the guest list to ensure that only the invited people enter. Firewalls monitor incoming and outgoing network traffic and look for anything that doesn’t belong there. Palo Alto Networks’ firewall security is of the highest level; external companies such as Gartner‘s prestigious Magic Quadrant rankings have named it a leader in its category.
Today, Palo Alto Networks has more than 70,000 active customers and is growing by expanding its product offering to include additional security categories on two other platforms. That gives the company three platforms: Network Security, Cloud Security and Security Operations. Currently, only half of the company’s customers use two of the three platforms, and only 13% use all three, so there is cross-selling opportunity.
Palo Alto is one of the largest security companies, with annual revenues of more than $7.5 billion. Profits have exploded in recent years and analysts believe that profits will continue to grow over the next three to five years, at an average of 22% annually. The company’s large customer base and size give it a strong hand in the battle for customers’ security budget dollars over the next decade.
2. CrowdStrike Holdings
Endpoint security is one of the focal points of next-generation solutions CrowdStrike Holdings (NASDAQ: CRWD) is quickly proving to be a winner in this arena. Endpoint security protects devices on a network (endpoints), such as computers or mobile devices. CrowdStrike uses artificial intelligence (AI) and a cloud-based platform to provide immediate and effective protection against potential threats. The platform learns from threat encounters, meaning the product improves as it grows and faces more threats.
CrowdStrike makes it remarkably easy to cross-sell its product because it sells different products and services as modules. Customers can choose what they want for their needs. CrowdStrike has launched modules over time as it expands into new categories. Today, 27% of CrowdStrike customers use at least seven modules, and the number using at least eight modules has more than doubled since the end of 2023.
A combination of customer growth and cross-selling has created enormous growth; Sales have multiplied from $400 million to $3 billion in just four years. The company has also reached the size where profits are skyrocketing, making the stock a good prospect for long-term investors. Analysts believe CrowdStrike’s revenues will grow an average of 22% per year over the next three to five years.
3.Microsoft
Tech giant Microsoft (NASDAQ: MSFT) is not the first name you think of when you talk about growth stocks in the field of cybersecurity. It also doesn’t grow as quickly as the others on this list. But what Microsoft does offer is a much higher floor, because it is a very diversified company with leading companies in different sectors. The Microsoft Defender security product is embedded in Windows and Office software.
Do you want to sleep well at night with your investments? Search no further. Palo Alto Networks and CrowdStrike are drops in the bucket compared to what Microsoft generates each year. The company has a rock-solid balance sheet with an AAA rating, one of the few two listed companies with such status. It’s also the only company on this list that pays dividends, which Microsoft has raised for more than two decades in a row.
Microsoft Defender will never be the center of attention for shareholders, but that’s okay. The stock can provide investors with cybersecurity exposure with the bonus of enterprise software, cloud, gaming and more. Despite its enormous size, Microsoft is still growing. Analysts believe the company will grow earnings 16% annually over the next three to five years, making Microsoft a jack-of-all-trades that investors can confidently hold for the long term.
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in CrowdStrike, Microsoft, and Palo Alto Networks. The Motley Fool recommends Gartner and International Business Machines and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has one disclosure policy.
3 Cybersecurity Stocks to Buy and Hold for the Next Decade was originally published by The Motley Fool
