These cybersecurity stocks are poised for rapid growth through 2028, and some of them are cheap right now

Many providers of cybersecurity hardware, software and services are expected to put up tremendous sales numbers as the AI build-out continues. - Getty Images

Amid all of the focus on the generative artificial intelligence build-out, the coming initial public offering from SpaceX, and anticipated IPOs for OpenAI and Anthropic, cybersecurity companies are also in a sweet spot — and might offer a different area of focus for investors.

A screen of the cybersecurity space highlights several companies expected to grow their businesses rapidly over the next two years. Some of these companies trade at relatively attractive price/earnings or price/sales valuations when compared with those of the S&P 500 SPX and its information technology sector.

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For a screen of cybersecurity stocks, we began by putting together a list of companies held by three industry-focused exchange-traded funds.

The portfolios of all three ETFs are dominated by U.S. companies. The BUG ETF has the highest exposure outside the U.S., with companies in five other countries making up 21% of the fund. For the CIBR ETF, companies in seven countries outside the U.S. make up 11.6% of the portfolio, while for the HACK ETF, companies in Israel and Japan make up a combined 10.3% of the portfolio.

Morningstar analyst Malik Ahmed Khan told MarketWatch that it’s important to be selective when considering cyber ETF holdings.

He said cyber ETFs can provide exposure to some companies facing “severe headwinds,” but are included because they are in the cybersecurity business.

ETFs can “have a lot of junk — and by junk I mean cyber companies that are actually not very well competitively positioned, but they are pure plays,” Khan said.

Cybersecurity stock screen

Together, the three ETFs hold 55 stocks. For this forward-looking screen, we are looking at projected compound annual growth rates (CAGR) for the companies’ sales from 2026 through 2028.

The projections are based on consensus sales estimates for calendar years, as adjusted by LSEG for companies whose fiscal reporting periods don’t match the calendar.

We began by cutting the list to 43 companies covered by at least five analysts polled by LSEG and for which consensus sales estimates are available through 2028.

Among the 43 companies, these 15 have the highest projected sales CAGR from calendar 2026 through 2028. All are U.S.-based. More context for the data is below the table.

Company Projected sales CAGR from 2026 through 2028 Forward P/E Forward price/sales Held by Broadcom AVGO 36.9% 26.9 14.6 HACK, CIBR Cloudflare NET 27.1% 154.3 23.9 HACK, CIBR CrowdStrike Holdings CRWD 22.3% 122.6 26.4 HACK, CIBR, BUG Arista Networks ANET 22.3% 35.3 14.1 CIBR Datadog DDOG 22.0% 80.6 16.1 CIBR Rubrik RBRK 20.8% 208.4 8.0 HACK, CIBR, BUG Netskope NTSK 20.6% N/A 5.0 BUG Telos TLS 20.5% 25.0 1.7 BUG Zscaler ZS 19.1% 38.2 7.3 HACK, CIBR, BUG Jfrog FROG 18.5% 71.1 13.2 CIBR Microsoft MSFT 18.1% 21.9 8.3 CIBR Alphabet GOOGL 17.9% 27.1 9.0 CIBR SentinelOne S 17.2% 46.3 4.8 HACK, CIBR, BUG Varonis Systems VRNS 17.1% 129.8 4.5 HACK, CIBR, BUG SailPoint SAIL 17.0% 43.8 6.4 BUG Sources: LSEG, FactSet (For Netskope’s forward price/sales ratio only)

The table includes forward price/earnings ratios and forward price/sales ratios for the companies. These are based on consensus earnings per share or sales estimates among analysts polled by LSEG, except for Netskope NTSK, for which the forward price/sales ratio was provided by FactSet.

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For Netskope, there is no forward P/E because the company is expected by analysts to post negative combined earnings over the next 12 months.

The projected sales CAGR compares with the weighted projected growth rates of 7.9% for the S&P 500 and 20.1% for the S&P 500 information technology sector.

For valuation comparisons, the S&P 500 trades at a forward P/E of 21.1, while the IT sector trades at a forward P/E of 24.3. The S&P 500 trades at a forward price/sales valuation of 3.3, while for the IT sector, this valuation is 7.8.

Among the list of 15 companies above, Microsoft MSFT stands out with the lowest forward P/E of 21.9.

Broadcom has the highest projected sales CAGR of 36.9% and may appear to be expensive at a forward price/sales ratio of 14.6. Then again, this stock’s forward P/E of 26.9 is not very high compared with those of the S&P 500 and the IT sector, considering the growth projections.

Telos TLS is the only stock on the list with a lower forward price/sales ratio than that of the S&P 500. It is among six companies on the list, including Zscaler ZS, that trade less expensively than the S&P 500 IT sector on this basis.

CrowdStrike CRWD, Palo Alto Networks PANW, Fortinet FTNT and Zscaler ZS stand out to him as the “big four” major cyber players to pay attention to, given that these companies have demonstrated competency across core cyber areas, be it endpoint, cloud, security operations, data security or identity.

“I think the correct way to think about it is all these businesses have a core competency which still brings in material cash flow,” Morningstar’s Khan said.

Truist Financial analyst Junaid Siddiqui told MarketWatch that, in the era of agentic artificial intelligence, the platform vendors building the best AI-defensible moats include CrowdStrike, Palo Alto Networks, Zscaler and Cloudflare NET.

He said data and identity security are becoming core focus areas in the age of agentic security, which he said will benefit other names, including Commvault Systems CVLT, Rubrik RBRK, Okta OKTA and SailPoint SAIL.

“As agentic AI evolves, the need to secure those autonomous agents becomes increasingly mission-critical,” he said.

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