With pressures created by the coronavirus prompting companies, schools, and other organizations to operate remotely, strong cybersecurity solutions have never been more important. An accelerated amount of valuable information is being transmitted through digital channels, and it's a virtual certainty that bad actors will ramp up their attacks as business is increasingly conducted over local networks and the internet.

Demand for digital protections will see long-term growth as cyber attacks increase in number and potential impact, and cybersecurity providers are poised to deliver strong business performance and returns for shareholders.

With that in mind, here's why Cloudflare (NET -0.65%), CrowdStrike Holdings (CRWD -0.40%), and FireEye (MNDT) stand out as three top cybersecurity stocks to buy this month. 

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Image source: Getty Images.

1. Cloudflare

Cloudflare provides security and content-delivery services that help keep web pages and applications safe from attacks and allow them to transmit information quickly. The company helps support over 27 million website properties, blocks over 72 billion cyber threats per day, and has a diverse and fast-growing customer base that spans the globe. 

The web-security specialist's stock has soared roughly 130% year to date, and Cloudflare now has a market capitalization of roughly $12 billion. That puts the company's current valuation at about 30 times this year's expected sales -- a figure that reflects expectations for continued business momentum. The company is posting impressive sales growth, and it's recording strong gross margins (72% last quarter) that suggest the business should be very profitable when management shifts from building its customer base to focusing on earnings.

Cloudflare's revenue grew at a 50% compound annual growth rate in the four-year period spanning from 2016 through 2019, and the business has continued to post strong sales gains in 2020. Revenue rose roughly 48% year over year in both the first and second quarters. Q2 revenue came in at $99.7 million, which was significantly higher than the company's guidance and the average analyst target. Sales could have been even higher if Cloudflare wasn't prioritizing the growth of its customer base.

In response to the challenging business climate created by COVID-19, the company has been delaying payment requirements for services. That's meant that less revenue is going in the books, but the business should see a surge down the line, and having a pay-later program should help bring new customers into its ecosystem that will stick around for the long haul. 

2. CrowdStrike

Software-level protections are an essential component of network cybersecurity, but most networks won't actually be safe unless there are protections that prevent hardware devices from being used as weak points. CrowdStrike is a provider of cloud-based cybersecurity software that helps prevent endpoint devices like computers, laptops, and servers from being exploited, and its stock has a promising long-term outlook.

While the cybersecurity market is highly fragmented, this hasn't stopped CrowdStrike from growing its business at a rapid clip. The company provides a market-leading solution in the endpoint-security niche and managed to nearly double its market share last year. CrowdStrike has continued to see strong traction this year as coronavirus-related conditions have pushed operations for businesses and organizations to the cloud, and it looks poised to benefit as high-performance cybersecurity services become increasingly essential.

Eventually, the cybersecurity services markets should begin to consolidate, with weaker providers getting shaken out or absorbed by category leaders, and top players enjoying elevated sales and profit potential. That's a scenario that bodes well for CrowdStrike and the top-rated services it provides in the endpoint protection niche. 

CrowdStrike should also benefit from the Internet of Things trend and the associated explosion in networked devices that will occur over the next decade. A report from Gartner estimates that the number of enterprise and automotive IoT endpoints will reach 5.8 billion by the end of this year -- up 21% from the 4.8 billion hardware endpoints in the category at the end of last year. The category will likely consider growing at a rapid clip due to the important role that technology is playing across business sectors, thereby increasing demand for CrowdStrike's services.

CrowdStrike is valued at roughly $27 billion and trades at about 35 times this year's expected sales. There's already lots of growth baked into the company's current valuation, but the business looks primed for long-term expansion and an eventual shift into substantial profitability and earnings momentum. 

3. FireEye

While Cloudflare and CrowdStrike have each seen their stocks more than double in 2020's trading, FireEye's performance has been decidedly less impressive. The company's share price has dipped roughly 11% this year, and it trades down about 27% from its initial public offering price. While FireEye's sales growth appears puny compared to high-flying leaders in the cybersecurity space, the stock is attractively valued amid the business's shift from on-premise hardware and software solutions to a cloud-focused, subscription-based model.

FireEye's sales climbed just 6% year over year in the second quarter, but momentum at the business is actually much more impressive if you look a bit under the surface. The company's cybersecurity, cloud subscription, and managed services segment saw annualized recurring revenue rise 27% year over year in the quarter, and this helped the business swing from an adjusted per-share loss of $0.01 in Q2 2019 to adjusted earnings per share of $0.09 in this year's second quarter. The cybersecurity provider's growth businesses now account for the majority of overall revenue and should position the company for better sales and earnings growth going forward.

FireEye has a market capitalization of just $3.3 billion -- a valuation that leaves plenty of room for explosive growth if the company's pivot to a subscription-focused business model continues to be successful. The company trades at just 3.6 times this year's expected sales and 57.5 times expected earnings, and these multiples looks cheap in the context of its industry and favorable long-term tailwinds for cybersecurity services. FireEye's growth might look paltry compared to many hotter companies in the space, but there's compelling evidence of a successful transformation underway, and the stock looks significantly undervalued.