Growth stocks have gotten walloped this year. The growth-focused Nasdaq Composite Index has lost about a third of its value, with many growth stocks down even further. The main issue weighing on growth stocks is concern that rapidly rising interest rates to combat red-hot inflation will send the economy into a recession. That would make it harder for companies to grow their revenue and profits.

However, some companies are more immune to an economic downturn because they benefit from significant long-term tailwinds. One sector where that's certainly the case is cybersecurity. With cyber threats growing, businesses and other entities need to improve their network security. That's driving explosive growth for companies focused on the sector.

Three great options for those with a little spare cash to invest these days are CrowdStrike (CRWD -1.18%)Palo Alto Networks (PANW -0.04%), and Zscaler (ZS -4.12%). An investor with $1,000 to invest could buy a couple of shares of each company, enabling them to build a mini cybersecurity basket to capitalize on the sector's enormous long-term growth potential.

Growing fast with plenty of room to run

CrowdStrike is growing at a blistering speed. The cloud security leader's revenue rocketed 58% in its fiscal second quarter to $535.2 million. Thanks to its software-as-a-service (SaaS) business model, the company has grown its annual recurring revenue (ARR) to $2.14 billion, a 59% year-over-year increase. While CrowdStrike isn't profitable on a GAAP basis, it's generating a growing stream of free cash flow. It produced $293 million of free cash through the first half of its 2023 fiscal year, up 54% year over year. 

CrowdStrike is only scratching the surface of its potential. The company sees a total addressable market (TAM) opportunity for its current cloud security portfolio of $75 billion. It sees its TAM reaching $158 billion by 2026, driven by organic market growth and its expanding product portfolio.

The company is tapping into that enormous opportunity by investing in product innovation to expand its capabilities. For example, it recently acquired Reposify to boost its threat intelligence and security and IT operations product suites. That will make those products more appealing to new customers, increase retention rates with existing customers, and help grow those relationships. Those drivers should enable CrowdStrike to continue growing its revenue and cash flow at blazing speeds in the coming years. 

Next-gen products are powering accelerated growth

Global cybersecurity leader Palo Alto Networks is also growing briskly. The company's revenue soared 37% during its 2022 fiscal year to $7.4 billion. A big driver was its rapidly expanding next-gen security segment. ARR from those products soared 60% year over year to nearly $1.9 billion.

Palo Alto Networks' investments in next-gen security are paying off. It was able to return to GAAP profitability for the first time in four years during its fiscal fourth quarter. Meanwhile, it's generating a growing stream of free cash flow, converting one-third of its revenue to free cash last year. 

The company sees more fast-paced growth ahead. Palo Alto forecasts its revenue will rise by more than 20% in its fiscal 2023, driving upwards of 40% ARR growth in next-gen security. Meanwhile, it expects its free cash flow margin to widen. That's giving it the funds to repurchase shares and continue investing in expanding its security platforms.

Cashing in on cloud security

Cloud security pioneer Zscaler grew its revenue by 62% in its 2022 fiscal year to more than $1 billion. Meanwhile, it turned 21% of its sales into free cash flow. That enabled it to end the year with a strong cash-rich balance sheet. 

The company expects to continue growing briskly. Zscaler forecasts that its revenue will surge 37% in its 2023 fiscal year as it continues to grow its customer base and expand those relationships. 

That's still only a fraction of Zscaler's potential. The company sees a $72 billion serviceable market opportunity to secure more users and workloads. Meanwhile, it sees an even bigger opportunity as it continues to expand its product capabilities.

One of Zscaler's biggest growth drivers is expanding its relationships with existing customers. Clients are increasingly consolidating their network security products into an integrated platform, which Zscaler offers. Because of that, the company sees a 6x revenue opportunity by expanding its relationships with existing customers as they subscribe to new features and add more users to its cloud security network.

Explosive growth potential

Growing cyber threats are driving the adoption of next-generation cloud security systems to keep data secure. That's enabling CrowdStrike, Palo Alto Networks, and Zscaler to grow rapidly as they add more customers to their platforms and expand those relationships. All three are still in the early stages of capitalizing on the massive opportunity for cloud security. Because of that, they're great stocks for those seeking to maximize their return potential.