What happened

One day after cybersecurity stocks CrowdStrike Holdings (CRWD 0.02%), Fortinet (FTNT -2.75%), and Zscaler (ZS -1.25%) gained anywhere from 2% to 5% on reports that a new national cybersecurity strategy will require companies to pay more attention to cybersecurity, shares of all three stocks are on the march again today. As of 10:10 a.m. ET Wednesday, CrowdStrike is tacking on another 1.7%, Fortinet is rising 2.5%, and Zscaler is doing best of all -- up 4.1%.

And you can thank Bank of Nova Scotia, or Scotiabank, for this.

So what

Toronto-based Scotiabank initiated coverage of CrowdStrike, Fortinet, and Zscaler at outperform (i.e., buy) ratings this morning. For good measure, the bank even described Zscaler as a "core growth holding," reports ratings watcher The Fly -- but really, the analyst likes all three of these stocks quite a lot.  

Taking Fortinet first, Scotiabank calls the cyber company a "rare blend" of double-digit revenue growth rates and profits under generally accepted accounting principles (GAAP) to boot -- and indeed, S&P Global Market Intelligence data confirm that Fortinet is the only one of these three stocks that is currently GAAP profitable. With net income of $742.5 million over the past 12 months, Scotiabank says the stock should hit $65 a share within a year.

"Great" products and "robust" demand are key attractions for CrowdStrike. While the stock may not be technically profitable as calculated according to generally accepted accounting principles, Scotiabank has high hopes that CrowdStrike will achieve analyst targets of $650 million in positive free cash flow this year. That would be up 5% from the $621 million CrowdStrike generated over the last 12 reported months.

Best of all may be Zscaler. According to Scotiabank, the company's security products offer total cost of ownership savings over competing offerings that will be attractive to its customers. Scotiabank sees no signs of market saturation in cybersecurity, either, which is good news for investors betting on Zscaler's projected 48% long-term earnings growth rate -- and in Scotiabank's estimation this is what makes the stock a "core growth holding."  

Now what

Add in the wild card of potential growth driven by a Biden administration that now seems set on imposing mandatory rules for companies and government agencies shoring up cybersecurity defenses, and you've got a secular growth story driving all three stocks higher today.

So which of these three stocks should you bet on to win?

As a value investor, I'm tempted to recommend going with the only one of the three that is currently GAAP profitable -- Fortinet. But in fact, all three of these companies are doing a good job of earning profit where it counts, on the cash-flow statement.

Over the last 12 months, Zscaler's positive free cash flow (FCF) tips the scales at $269 million (valuing the stock at 63 times free cash flow). CrowdStrike does even better with $621 million in trailing-12-month FCF, giving it a 39 times FCF valuation. And Fortinet? Well as it turns out, with $1.2 billion in FCF and a valuation of less than 34 times FCF, Fortinet isn't just the only profitable stock of the bunch -- it's the cheapest when valued on free cash flow as well.

My hunch: It's probably also the safest stock of the three to invest in.