Shares of Check Point Software (NASDAQ:CHKP) rallied about 30% this year and easily outperformed the NASDAQ's 20% rally. Those gains were fueled by robust demand for its enterprise security solutions -- which include next-gen firewalls, threat prevention, data protection, and secure gateway services.

Check Point offers these services in application bundles called software blades, which are installed into a company's IT framework. After booking initial product and license fees, Check Point generates consistent revenue from those customers with subscriptions. For mainstream consumers, Check Point offers ZoneAlarm, an antivirus and firewall suite with free and premium tiers.

A padlock on a computer keyboard.

Source: Getty Images.

Looking ahead, I think Check Point still has room to extend its year-long rally. Let's examine the four major catalysts that could propel the stock to fresh highs.

1. Cybercrime is very costly for businesses

The global cost of cybercrime damage -- which includes a wide range of data breaches, ransomware, and other hacks -- could double from $3 trillion in 2015 to $6 trillion in 2021, according to Herjavec Group's 2016 Cybercrime Report.

Cybersecurity Ventures predicts that damage from ransomware attacks alone could surge from $325 million in 2015 to $5 billion this year. The firm also estimates that cybersecurity spending will reach $1 trillion between 2017 and 2021.

This makes 24-year-old Check Point, widely regarded as a pioneer of the cybersecurity industry, a go-to company for securing enterprise networks. The company already provides services to over 100,000 small to medium-sized businesses worldwide.

2. Consistent top line growth

Unlike many younger cybersecurity companies, which post volatile double-digit sales growth, Check Point usually generates slow but steady single-digit growth. Its revenue rose 9% annually to $459 million last quarter, beating estimates by $4 million.

Its products and licenses revenue rose just 1%, but its software blades subscription revenues surged 27% and accounted for 26% of its top line -- versus 22% in the prior year quarter. The growing weight of Check Point's subscription revenues stabilizes its sales growth and reduces the need to constantly chase new customers -- which can cause its marketing costs to spike.

Deferred revenues, a key indicator of future demand, rose 19% annually to $1.1 billion. Wall Street expects the company's annual revenue to rise 8% to $1.87 billion this year.

3. Rock-solid profitability and low valuations

Check Point is based in Israel, a market which generally doesn't pay the exorbitant stock bonus packages of its Silicon Valley peers. Last quarter, Check Point spent just 5% of its total revenues on stock-based compensation (SBC) expenses.

A Silicon Valley flag pinned to a paper map.

Source: Getty Images.

By contrast, Palo Alto Networks (NYSE:PANW), which was founded by a former Check Point employee, is based in Silicon Valley. That's why Palo Alto spent 24% of its revenue on SBC expenses last quarter.

Palo Alto and many of its Bay Area peers exclude SBC expenses from their non-GAAP earnings, but remain deeply unprofitable on a GAAP basis, which includes those expenses.

Check Point is profitable by both non-GAAP and GAAP measures. Its non-GAAP earnings rose 16% annually to $1.26 per share last quarter, while its GAAP EPS rose 18% to $1.12. Analysts expect its non-GAAP earnings to improve another 10% this year.

Check Point trades at just 25 times earnings, which is significantly lower than the industry average P/E of 118 for application software makers. Its forward P/E of 16 looks even cheaper, assuming that the company hits the Street's modest growth targets.

4. Stable cash flow growth and room for acquisitions

Check Point generated $972 million in free cash flow over the past 12 months. That growth gives it plenty of room to pursue additional acquisitions.

CHKP Free Cash Flow (TTM) Chart

Source: YCharts

Check Point previously bought smaller companies -- like stealth-mode security start-up Hyperwise and mobile security firm Lacoon -- and it was reportedly eyeing privileged accounts management solution provider CyberArk Software (NASDAQ:CYBR) last year. Shrewd acquisitions across the security market could widen Check Point's moat against any potential challengers.

The key takeaways

If you're looking for a conservative cybersecurity play with stable top line growth, consistent profitability, and low valuations, Check Point fits the bill. It's one of the only cybersecurity companies I'd consider owning in this frothy market, and its core business has plenty of room to grow as cybersecurity spending accelerates worldwide.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Check Point Software Technologies. The Motley Fool recommends CyberArk Software and Palo Alto Networks. The Motley Fool has a disclosure policy.