Enterprises around the world are undergoing a rapid digital transformation. They are shifting resources to the cloud, developing and deploying new software, and enabling employees to work remotely, more often than not from unprotected devices and networks.

Collectively, those trends have made traditional security solutions ineffective. That has paved the way for disruptors like CrowdStrike (CRWD -2.64%), Okta (OKTA 0.87%), and Zscaler (ZS -0.80%) to fill a pressing need and gain market share. These increasing cybersecurity needs mean all three companies are growing and it's why these stocks look like good long-term investments.

Let's find out a bit more about why they might be good buys in April.

Individual pressing a digital lock icon.

Image source: Getty Images.

1. CrowdStrike: Endpoint and workload protection

CrowdStrike protects workloads in any environment (i.e. on-premise, in the cloud) across a range of devices like laptops, workstations, servers, and smartphones.

Unlike legacy vendors, CrowdStrike's platform was built in the cloud, meaning it can collect and analyze massive amounts of data. In fact, data is gathered from every protected device, and it's used to power the AI algorithms in CrowdStrike's proprietary Threat Graph, the engine that predicts and prevents cyberattacks. Over time, as more data is collected, the Threat Graph becomes more intelligent.

But there's also another benefit to capturing so much data: CrowdStrike has become an unrivaled authority in the field of threat intelligence, which has translated into industry-leading detection capabilities.

Threat intelligence goes beyond prevention and instead seeks to understand a hacker's motives, methods, and targets. That knowledge can help clients proactively prevent threats or respond more quickly if an incident occurs.

To that end, CrowdStrike released Falcon X Recon last October, a new software module that automates data collection from the deep and dark web. This allows security teams to monitor the cybercriminal underground for emerging threats.

Not surprisingly, CrowdStrike's software has been in high demand, driving strong revenue growth.

Metric

2018

2021

CAGR

Revenue

$119 million

$874 million

95%

Data source: CrowdStrike SEC filings. CAGR: compound annual growth rate. Note: fiscal 2021 ended Jan. 31, 2021.

Going forward, CrowdStrike's best-in-class solution should keep the company ahead of its competition, and help it capture a big chunk of its $36.5 billion market opportunity.

2. Okta: Identity and access management 

The Okta Identity Cloud allows clients to securely connect users to any application or service, whether the user is an employee or a customer. It also enables administrators to enforce access management decisions based on a user's identity, device, location, application, or even the time of day.

At the end of last year, Okta had 10,000 customers, up 26% from fiscal 2020 (ended Jan. 31, 2020). Notably, 1,950 of those customers have contracts with annual values exceeding $100,000 -- that figure is up 33% from the prior year. 

The Okta Identity Cloud benefits from its infrastructure-neutral disposition. Put another way, Okta isn't biased toward any particular public cloud. The same cannot be said for identity providers like Microsoft and Amazon. This neutrality has helped Okta achieve a greater market presence than any of its rivals.

Additionally, Okta benefits from a network effect. Its platform currently supports integrations with over 7,000 applications and IT infrastructure providers (including Amazon Web Services and Microsoft Office 365). But as more integrations are added, extending Okta's functionality, the platform becomes more useful to customers. That should draw more users to Okta, incentivizing more technology partners to support integrations with its platform.

In recent years, the push toward digital transformation has been a strong tailwind for Okta, powering stellar top-line growth.

Metric

2018

2021

CAGR

Revenue

$257 million

$835 million

48%

Data source: Okta SEC filings. CAGR: compound annual growth rate. Note: fiscal 2021 ended Jan. 31, 2021.

Management estimates Okta's total addressable market at $55 billion, leaving the company with plenty of room to grow. To tackle that opportunity, Okta is looking to expand its international operations, which represented just 16% of revenue last year. Investors should pay attention to Okta's growth outside of the United States.

3. Zscaler: Network and cloud security

Zscaler's platform securely connects users, devices, and applications over any network. Put another way, Zscaler allows its clients to safely access the internet and applications, regardless of whether an individual is in the office or working remotely, or whether the application runs on-premise or in the cloud.

The company employs a SASE (secure access service edge) network architecture, meaning all data is routed through Zscaler's security cloud, where it is inspected and business policies are enforced. This eliminates the need for on-premise appliances, reducing costs and simplifying IT maintenance for Zscaler's clients.

Last December, the company introduced a new service: Zscaler Cloud Protection (ZCP). Unlike its other three services, all of which protect users, ZCP is designed to secure cloud workloads. Going forward, as more enterprises accelerate their digital transformation and move to the cloud, this new product should gain traction with customers.

During the latest earnings call, CEO Jay Chaudhry told investors that Zscaler now has over 5,000 customers, up from 4,500 six months ago. What's more, the company achieved a net retention rate of 127% over the last 12 months, up from 116% the year before. In other words, Zscaler is keeping a high percentage of its clients, and those clients are spending more each year.

That compounding effect has powered strong revenue growth for this cybersecurity company.

Metric

 2018

2021 Q2 TTM

CAGR

Revenue

$190 million

$536 million

51%

Data source: Zscaler SEC filings. CAGR: compound annual growth rate. TTM: trailing 12 months.

In the coming quarters, Zscaler plans to grow its business by targeting smaller enterprises (those with 2,000 to 6,000 employees). The company is boosting internal sales efforts, expanding its channel partners, and launching marketing campaigns aimed at this market.