Buy This Top Cybersecurity Stock Instead

If your brand is associated with what some are calling the “biggest computer outage in history,” it’s hard to underestimate the damage it could do to your business in the short and long term. That’s the situation Crowd strike (NASDAQ: CRWD) is currently in this situation after a massive outage that occurred last month.

While the company has addressed the issue with the problematic update and is trying to ease customer concerns, the stock has stumbled in recent weeks. It is questionable how well it will be able to recover from these current headwinds or how long it will take to rebuild customer confidence. At the very least, this could be a turbulent time for shareholders in the near term.

Investors might be tempted to take a chance on CrowdStrike and buy the cybersecurity actions But rather than take that risk, consider a potentially better alternative: buying shares in competing companies. Palo Alto Networks (NASDAQ:PANW) instead.

Palo Alto Comes Off Strong Fiscal Year With Growth Ahead

On August 19, Palo Alto reported its fourth-quarter results for the period ending July 31. It was a strong finish to the year for the company, with sales up 12% to $2.2 billion for the period. For the full year, revenue increased 16%, to just over $8 billion. Palo Alto’s operating income totaled $683.9 million for the full year, up 77%.

For the new fiscal year, the company is forecasting further growth opportunities, with revenue expected to grow at least 13% to $9.1 billion. The company has focused on “platformization” to drive further growth. This involves bundling services (including artificial intelligence solutions) to add more value to its customers. Palo Alto sees this as a way to provide management with a “simplified” approach to consolidating cybersecurity tools into a single platform, helping to reduce overhead and increase efficiency.

The stock is trading at a much more attractive valuation than CrowdStrike

CrowdStrike shares are up just 4% year-to-date after their recent drop, while Palo Alto shares are up 16%. But despite the better gains so far, Palo Alto may still have more upside potential than CrowdStrike.

Palo Alto trades at more than 50 times its price estimated future profits (according to analyst estimates). While that’s not exactly cheap, it’s still a more attractive multiple than the 60x+ forward earnings that CrowdStrike is trading for.

Palo Alto’s other strength is its impressive margins. Not only does it have a larger business than CrowdStrike, but its operating margins are generally better. This can lead to a better bottom line and more attractive earnings multiples as the company grows its top line.

The story continues

Palo Alto is less risky than CrowdStrike

Palo Alto no longer has as many question marks over its cybersecurity business, its valuation is more attractive and its margins seem…