Cybersecurity: A Modest Proposal

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One does occasionally stumble upon opportunities, doesn’t one? A little dip here, a slight correction there… and suddenly, the cybersecurity sector presents itself as… well, not exactly cheap, but certainly less aggressively priced than it was. The ETFs, naturally, are having a bit of a wobble – down anywhere from a tiresome 3% to a positively dramatic 24% over the last year. The market, in its infinite wisdom, has decided to prance merrily upwards, of course. Rather predictable, really.

The online world, as anyone with a functioning brain will tell you, remains resolutely unsafe. Demand for protection, therefore, is hardly likely to evaporate. I’ve been having a little look, and I rather fancy the prospects of three companies in particular: SentinelOne, CrowdStrike, and Palo Alto Networks. Let’s see if they’re worth a nibble, shall we?

1. SentinelOne: The Upstart

SentinelOne, with a revenue growth of 24% – positively breathless, really – is the fastest of the lot. And, surprisingly, it’s the least extravagantly priced. A market cap of $4.5 billion, reduced to an enterprise value of $3.9 billion… one can acquire a rather substantial piece of the action for a mere four times trailing revenue. Compared to the rather giddy multiples of CrowdStrike and Palo Alto Networks (21 and 11, respectively), it’s almost… sensible.

They’ve been rather clever, these SentinelOne chaps, embracing artificial intelligence with admirable enthusiasm. Their Singularity platform, apparently, leans heavily on it to detect and thwart digital mischief. Still, it’s trading at barely a third of its 2021 IPO price of $35. A bit bruised, perhaps, but with potential.

Naturally, there’s a catch. They’ve been losing money, and rather spectacularly at that. The margins are… let’s just say they’re not exactly robust. However, with the share price halved, a turnaround is certainly on the cards. At the very least, it’s an attractive takeover target. One always appreciates a bit of drama in the markets, don’t you think?

2. CrowdStrike Holdings: The Fallen Idol

CrowdStrike, until recently, was the darling of the investment world. Then, a rather embarrassing outage in the summer of 2024 occurred. Hospitals, airlines, banks… all grinding to a halt. A tech snafu, they called it. One suspects a rather large red face somewhere within the organization.

The good news is that they’ve recovered remarkably well. The share price is 50% higher than it was on that fateful day. Revenue growth has slowed – six consecutive quarters now – but that’s hardly surprising in a maturing industry. The reputation, thankfully, hasn’t suffered unduly. A trailing revenue growth of 22% is… acceptable. One might even say… decent.

3. Palo Alto Networks: The Solid Citizen

Bringing up the rear, in terms of top-line growth, is Palo Alto Networks. A mere 15% increase in revenue over the past year. Rather pedestrian, really. Eight consecutive quarters of sluggish gains. One begins to wonder if they’ve lost their sparkle.

However, with a market cap of $111 billion, they remain the largest player in this space. And, crucially, they’re consistently profitable. Double-digit net margins, no less. If one is seeking a cybersecurity investment in February, going for the top dog is, shall we say, a perfectly reasonable strategy. It lacks a certain frisson, perhaps, but one can’t have everything.

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2026-02-09 19:12