The Cost of Cybercrime Is Soaring -- 2 Top Growth Stocks to Buy Now

Digital transformation projects like cloud migration and IT modernization help businesses operate more efficiently, but they have also paved the way for explosive growth in cybercrime. The proliferation of cloud workloads and connected devices has introduced new attack surfaces, and hackers haven't missed a beat. The damages inflicted by cybercrime totaled $8.4 trillion last year, and that figure will nearly triple by 2027, according to Statista.

That means cybersecurity will become even more essential in the years ahead, and CrowdStrike (CRWD 0.13%) and Okta (OKTA -0.89%) should be major beneficiaries of that trend. Here's why investors should buy these growth stocks today.

CrowdStrike: Endpoint device security

CrowdStrike is best known as a leader in endpoint security, but its Falcon platform is actually comprised of 23 modules that span multiple cybersecurity verticals, protecting endpoint devices, cloud workloads, identities, and data. That broad product offering simplifies security workflows for clients. Rather than stitching together products from multiple vendors, they can standardize on a single integrated platform.

However, CrowdStrike truly shines because of its industry-leading artificial intelligence (AI) engine. The Falcon platform was engineered to capture and analyze data unlike any other solution on the market, and that makes its AI "uniquely effective" in preventing attacks. That compelling value proposition has CrowdStrike growing like wildfire. Its customer count increased 41% last year, and the average customer spent 25% more. In turn, revenue soared 54% to $2.2 billion, and free cash flow (FCF) climbed 64% to $941 million.

Investors have good cause to believe that strong growth will continue into the future. The International Data Corp. recently recognized CrowdStrike as the market leader in endpoint security for the third consecutive year. The report indicates that CrowdStrike not only holds more market share than other vendors, but it's also growing more quickly. The implications therein run deep where its AI is concerned.

Specifically, CrowdStrike has access to more endpoint data than its peers, meaning its AI models are likely improving more quickly. That virtuous cycle has thus far kept the company on the cutting edge of endpoint security, but it has also helped CrowdStrike achieve a leadership position in other cybersecurity verticals, including threat intelligence and cloud security. The company believes it will continue to gain share across the industry.

CrowdStrike values its addressable market at $76 billion in 2023, but management expects that figure to approach $100 billion by 2025, leaving a long runway for growth. And with shares trading at 13.7 times sales, a discount to the three-year average of 35.3 times sales, now is a great time to buy a small position in this growth stock.

Okta: Identity and access management

Okta is an identity and access management (IAM) provider. Its platform is a policy enforcement engine that secures sensitive data and systems by ensuring only the right people have access to those resources. Specifically, it leans on artificial intelligence to authenticate users based on context like identity, device, and behavior. It also reduces friction by enabling users to access all of their applications with a single entry of their credentials.

Okta faces stiff competition from rivals like Microsoft and Ping Identity, but the company has distinguished itself in two important ways. First, it offers the broadest and deepest set of pre-built integrations in the identity and access management (IAM) industry, meaning organizations can quickly configure and deploy its software. Second, Okta offers the most comprehensive identity suite on the market. Its platform addresses both workforce IAM and customer IAM use cases, and industry analysts have recognized the company as a leader in both verticals.

Last year, Okta battled integration challenges from its Auth0 acquisition, a problem that exacerbated headwinds related to the difficult economic climate. But cost-cutting measures and a revamped go-to-market strategy allowed the company to bounce back with a solid financial performance in the fourth quarter. Its customer count increased 17% and the average customer spent 20% more. In turn, fourth-quarter revenue climbed 33% to $510 million, and the company reported free cash flow of $72 million, up from $5 million in the prior year.

Okta recently expanded its workforce identity suite with an identity governance and administration (IGA) product, which complements traditional IAM by introducing tools for workflow automation and compliance reporting. And later this year, the company plans to further expand its workforce identity offering with a privileged access management (PAM) product, which will provide additional security for privileged accounts. By integrating IGA and PAM use cases into its platform, Okta is further solidifying its position as the industry leader.

On that note, management estimates its addressable market at $80 billion, leaving a long runway for growth. Yet shares currently trade at 7.1 times sales, a discount to the three-year average of 25.2 times sales. That creates a reasonable buying opportunity for investors.