Cybersecurity threats aren't going anywhere anytime soon; each year, hackers figure out new ways to exploit tech vulnerabilities. This makes cybersecurity companies more important than ever and creates a huge opportunity for investors.
Two companies set to benefit from these growing security needs are CrowdStrike Holdings (CRWD 2.03%) and Fortinet (FTNT 0.23%). Here's why you should consider buying these stocks and holding them for the next 10 years.
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1. CrowdStrike
CrowdStrike's main offering is endpoint cybersecurity for devices (think phones and laptops), but the company also offers more than 20 different services, ranging from cloud security to network monitoring.
It has built a loyal customer base, with 40% of customers having signed up for six or more of its services.
The company has captured the attention of investors as it continues to put up impressive financial results. Revenue rose 42% to $693 million in the first quarter, and adjusted earnings increased 84% to $0.57 per share.
Its financials are also strong, with just $741 million in long-term debt and $2.9 billion in cash and cash equivalents.
To give you an idea of how fast CrowdStrike is growing, three years ago, it had just 5,400 subscription customers -- now, it has more than 23,000.
And it is making big moves into new areas to keep those customers happy, including new artificial intelligence (AI) services. The company recently released its own AI security analyst for customers to monitor potential threats, and it partnered with Amazon's AWS to build generative AI applications for cloud security.
With the current growth trajectory, solid financial footing, and new services with AI, CrowdStrike is well positioned for the security demands of the next decade.
2. Fortinet
Fortinet is another leading cybersecurity company. It offers various services, including antivirus software and firewalls. The latter are one of the reasons investors are drawn to this stock: It ranks as No. 1 in firewalls, according to the latest IDC data.
The company is experiencing significant growth. Total revenue increased 32% in the first quarter to $1.3 billion, and adjusted earnings jumped 79% to $0.34 per share. Current free cash flow is $647 million, up more than double from the year-ago quarter.
Management forecasts impressive gains this year, with sales estimated to rise 22% to about $5.4 billion. And it believes annual sales will hit $8 billion by 2025.
The company now has more than 660,000 customers worldwide, and its recent revenue projections indicate it hasn't run out of room to grow. I think the company has a good chance to deliver on its optimistic projections in part because Fortinet continues to expand its large enterprise customers.
Fortinet said that enterprise customer deals worth more than $1 million increased 38% and billings from these deals rose 50% in first quarter -- including an eight-figure deal with a Fortune 50 company. Additionally, management said that it added 6,000 new companies to its customer base, which it claimed on the earnings call "creates the opportunity to continue to sell into them."
The company's strong customer growth, including large enterprise customers, gives Fortinet significant opportunity to expand its sales in the coming years. And with its lead in the firewall space, investors would be wise to put this cybersecurity stock on their short list.
Don't be swayed by market noise
If you buy and hold CrowdStrike and Fortinet for the next decade, you will inevitably experience some price swings. When it happens, look at your original investment thesis for buying the stocks to see if anything has fundamentally changed with the companies. If nothing has, and the market is moving based on news unrelated to their underlying businesses, then stay the course and let these cybersecurity leaders continue to grow.
