2 Cybersecurity Stocks Worth Buying in 2022

If there's one thing thriving during the pandemic, it's cybercrime. The work-from-home trend has created an appetizing target for hackers, as employees have often accessed secure company networks from devices that may not be fitted with the same protection as those in the office. 

In the first half of 2021, a total of 1,097 organizations were hit with ransomware attacks worldwide, with cybercriminals seizing networks and critical data with the goal of extracting payment from their victims. By comparison, 1,112 organizations were hit by these attacks in the whole of 2020. 

Cybersecurity companies have benefited from this explosion in crime, and investors have found a safe haven for their portfolios in some cybersecurity stocks in particular. Two of them, in particular, are still worth buying in the new year.

Image source: Getty Images

1. Tenable

As cybercriminals evolve, the security we use must evolve ahead of them. Large organizations are finding that running a tight defense isn't enough on its own -- they also need to be proactive in hunting for threats. That has driven soaring growth in threat detection and vulnerability management companies like Tenable (TENB +0.88%), which is now the industry leader. 

Tenable owns the Nessus platform, which is the most deployed vulnerability management tool in the world, serving 30,000 organizations with over 2 million individual downloads. The U.S. government's database of common vulnerabilities and exposures (CVEs) has grown to over 177,000 threats, and Nessus covers 67,000 of them, which makes it No. 1. Since the platform is customizable, companies can tailor it to their specific needs, and therefore it's an obvious choice for businesses of all sizes.

But based on Tenable's customer breakdown, the segment of highest-spending organizations is growing the fastest, suggesting larger companies have become more conscious of the threats they face. In 2016, Tenable had 124 six-figure customers -- those who spend $100,000 or more annually -- and right now, it has 995 of them. That represents 51% compounded annual growth, outpacing overall revenue growth in the same period.

Data source: Tenable, Yahoo! Finance. CAGR = Compound Annual Growth Rate.

Tenable is on the cusp of its second consecutive profitable year after consistently making losses in the years prior. After it generated $0.19 in earnings per share in 2020, analysts expect the company will deliver $0.31 by the close of 2021. That's due (in part) to the rapid growth in large customers, which will likely continue in the new year as cybersecurity remains a focus in the corporate world.

If these trends persist, 2022 could merely be the start of a great long-term opportunity for investors purchasing this stock right now. 

Image source: Getty Images

2. Zscaler

Zscaler (ZS +0.09%) takes a cloud-based approach to cybersecurity, so using its products typically won't require installation on local networks or individual devices. On a corporate level, it primarily acts as a layer of protection between an employee's computer (or device), and the company's online assets which they access. That makes Zscaler an ideal solution for organizations with a remote workforce.

As more of the corporate world's operations move online, the number of applications required to run everyday tasks is soaring. Zscaler offers a private access service which builds a protective perimeter around those applications with zero-trust access, meaning every user has to meet strict identity requirements whether they're an internal employee or not. Zscaler Private Access (ZPA) can effectively make an organization's applications invisible to outsiders, and therefore sheltered from attacks.

One of the most popular collaborative software applications is Microsoft's Office 365, and Zscaler is an authorized networking partner. Over 4,500 companies have deployed Office 365 using Zscaler, protecting the critical information and data created in the course of operations.

Zscaler has gone from strength to strength from a financial perspective, delivering a non-GAAP profit from fiscal 2019 onwards. In the current fiscal 2022 year, analysts expect the company to cross $1 billion in revenue for the first time.

Data source: Zscaler, Yahoo! Finance. CAGR = Compound Annual Growth Rate.

The future looks even brighter. In the recent first quarter of fiscal 2022, the company announced it became the first, and only, Zero Trust Network Access solution granted authorization by the Department of Defense to operate at Impact Level 5, the second-highest security tier.

Even though Zscaler is set to have its best year yet, the long term looks even better, and that's an attractive proposition for investors.