High beta tech stocks have sold off significantly in the recent past; however, long-term investors shouldn’t lose hope. Investing in the right sector can yield long-term profits despite the selloff, and one such area is the growing cyber security market.
With cyber attacks increasing consistently, the need for cyber security has increased massively and is expected to go up in the coming years. Investors can choose from many stocks in the segment, but market leader Palo Alto Networks (PANW, Financial) is a strong buy on the pullback.
Continuous growth
Palo Alto Networks holds a leading position in the cyber security industry and is the most appreciated next-generation cyber security company. The company has been successful in innovating at a faster rate than its peers, which has given it an advantage over its rivals.
As a matter of fact, Palo Alto Networks generated its top quarterly year-over-year growth numbers in the first quarter, meanwhile debuting on the communal markets. Palo Alto has done a prodigious job of exploiting continuously escalating cyber security trepidations. Despite the fact that many of the company’s chief rivals have not been familiar with the growing competition in the industry, Palo Alto Networks appeared entirely unaffected by the rising competition.
Nowadays, clients are shifting away from point solutions to comprehensive prevention platforms; therefore Palo Alto Networks has a massive opportunity ahead as the company has one of the finest prevention platforms in the cyber security industry. Palo Alto Networks’ advanced platform has permitted the company to figure one of the leading customer bases in the cyber security industry, comprising 28,000 clients across a multitude of countries. The company’s WildFire product was the most successful product launched by the company and has more than 8,000 clients, most of them among the major corporations in the world.
Perspective moving forward
The company’s robust first-quarter results and performance together with earnings elevation for the approaching second quarter indicate a decent start for Palo Alto this year. The strong results produced by the company are evidence the it has been able to perform well despite the ferocious competition in the cyber security industry.
The intensity of the rivalry in the sector prompted Palo Alto Networks to spend heavily on sales and marketing with costs from this division mounting more than 48% on a yearly basis, down by 200 basis points from a year ago period. Spending on innovations is key to Palo Alto Networks’ future as the cyber security sector is still young and has a lot of room to grow.
Conclusion
Given Palo Alto’s R&D expenditure, it is likely that the company will be able to innovate at a faster rate than its peers. Innovation is the key to winning in the cyber security market; considering Palo Alto’s, I have no doubt the company will be able to innovate its way to success. Investors should use this pullback to buy Palo Alto Networks.