The 5 Top Cybersecurity Stocks to Watch for December 2017 - and 1 to Buy

The top cybersecurity stocks to watch for December need to be on every investor's radar as the industry experiences unstoppable growth caused by increasingly frequent cybercrime.

Plus, we'll give you the name of the one stock to buy that's currently dominating the industry.

You see, global cybercrime damages are expected to reach $6 trillion annually by 2021.

cybersecuritySpending on cybersecurity is expected to exceed $1 trillion through 2021, according to Cybersecurity Ventures. That's up from $39.5 billion in 2013, an increase of 532% on an annual basis.

A number of cybersecurity stocks have already delivered investors outstanding returns in 2017.

And that's only the beginning...

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Companies helping customers mitigate profit-eating cybercrime damages will see huge gains in 2018, as the frequency of cybercrime attacks continues increasing.

In fact, over 1.9 billion records were breached in just the first half of 2017, compared to 575 million in all of 2013, an increase of more than 230%. We don't see any signs of this trend slowing down.

Our cybersecurity stock recommendation you'll see today is positioned to double over the next two years, because it serves some of the biggest customers on the planet...

Bigger than even Apple Inc. (Nasdaq: AAPL) or Inc. (Nasdaq: AMZN).

But with so many different types of cybersecurity threats, there are plenty slices of the $1 trillion pie to go around for smaller companies specializing in certain niches.

Here are the five top cybersecurity stocks to watch for December...

Top Cybersecurity Stocks to Watch, No. 5: CyberArk Software Ltd. (Nasdaq: CYBR)

Israel-based CyberArk Software Ltd. (Nasdaq: CYBR) provides encrypted password management services to organizations internationally.

Rather than having employees attempt to manage their own passwords, CyberArk's Enterprise Password Vault tool provides organizations a way to monitor all password entry attempts through one platform.

And the company's other products all follow this principal of monitoring employee access points under one encrypted platform.

CYBR shares have fallen 9% this year, from $48.40 to $44, but have rebounded from August's low of $40. This drop came as a result of weak earnings results compared to 2016, caused by some difficulty closing new deals in Europe. However, investors are optimistic that this is a temporary setback.

According to S&P Capital IQ, the 18 analysts covering CyberArk are still bullish on the company, with an average price target of $50.40 and a high target of $57. This represents upside of 14.54% and 29.54%, respectively.

The next stock on this list has performed much better than CYBR so far this year...

Top Cybersecurity Stocks to Watch, No. 4: Palo Alto Networks Inc. (NYSE: PANW)

Silicon Valley-based Palo Alto Networks Inc. (NYSE: PANW) specializes in cloud and "Internet of Things" security platforms.

PANW's advantage is its comprehensive cybersecurity platform for customers with many different access points and vulnerabilities. This has allowed it to secure large tech giants like Microsoft Corp. (Nasdaq: MSFT) and Amazon as customers.

Take Amazon, for example. We're all familiar with the company's retail website, where buyers and sellers can make transactions from computers and mobile devices.

But there's also Amazon's cloud-based business platform, Amazon Web Services (AWS). Users interact with AWS through different access points, and this presents its own set of vulnerabilities.

Being able to manage a broad range of vulnerabilities under one platform is crucial for large companies.

Though not yet profitable, PANW has grown its revenue every single year since 2009, from $13.4 million to $1.76 billion as of fiscal year 2017 ended in July. That represents a compound annual growth rate of 72%.

So far this year, the company's stock is up 6.3%, to $143.50, but it still has significant upside remaining. According to S&P Capital IQ, the average price target for PANW based on 39 analysts' estimates is $167.90, with one analyst targeting as much as $196. From current levels, those price targets give the company 17% and 36.6% upside, respectively, over the next 12 months.

The next stock on this list is cornering the consumer market at a fraction of PANW's price...

Top Cybersecurity Stocks to Watch, No. 3: Symantec Corp. (Nasdaq: SYMC)

Symantec Corp. (Nasdaq: SYMC) is one of the leading providers of consumer-level cybersecurity software.

While most cybersecurity firms are focused on enterprise-level cloud-based software, Symantec is honing in on the retail market that its competitors are overlooking.

In February, the company acquired the LifeLock identity protection service, which added over 100,000 new members in the week following the Equifax security breach.


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Announced on Sept. 7, the breach exposed the credit information - including social security numbers - of more than 143 million Americans.

Symantec's stock is up 10% year to date, currently trading at $27.50. At this price, it's one of the cheapest stocks in its cybersecurity software peer group, according to S&P Capital IQ, on a price-to-earnings basis.

Based on an average price target of $31.71, according to 24 analysts, and a high target of $40, SYMC shares have 15.31% and 45% upside, respectively.

Up next is one of the top-performing cybersecurity stocks for 2017...

Top Cybersecurity Stocks to Watch, No. 2: Fortinet Inc. (Nasdaq: FTNT)

Fortinet Inc. (Nasdaq: FTNT) specializes in comprehensive business network cybersecurity. Fortinet tends to serve medium-scale organizations, like colleges, public school systems, and hospitals. These customers typically don't have a core competency in technology and require a top-to-bottom network security solution.

Extraordinarily, Fortinet has met or beaten analysts' earnings expectations in all 32 quarters since it went public in November 2009. Over the same period, the company also beat revenue estimates in all but one quarter, where it missed expectations by 0.05%.

The company's shares are up 37.5% so far this year, from $30 to $41.25. According to S&P Capital IQ, the 29 firms covering FTNT's shares have an average price target of $43.55, with a high target of $53. That represents upside of 5.6% and 28.5%, respectively.

If the company continues crushing expectations like it has, its share price rally will continue.

Next up is the biggest gainer on this list...

Top Cybersecurity Stocks to Watch, No. 1: Mimecast Ltd. (Nasdaq: MIME)

The cybersecurity industry's biggest gainer this year is London-based e-mail security company Mimecast Ltd. (Nasdaq: MIME). Year to date, MIME shares have gained 66.6%, climbing from $17.40 to $29.

And there's a very good reason why a company that specializes in e-mail cybersecurity has done so well.

One in two users clicks on links from unknown e-mail senders, according to studies conducted at Friedrich-Alexander University of Erlangen-Nuremberg, Germany.

But when users who clicked on a link were asked whether they clicked, one in two of them would lie.

This means not only are we less aware of cybersecurity threats than we believe, but we're also half as likely to report a threat when it actually presents itself.

As a result of this behavior, Mimecast has grown its revenue from $88.3 million in 2014 to $222 million in in 2017, for a compound annual growth rate of 25.92%.

According to S&P Capital IQ, the 11 analysts covering MIME shares have an average price target of $36.27, with one analyst targeting $42. Those price targets represent upside of 25.07% and 44.83%, respectively.

The company has matched or beaten analysts' earnings expectations in seven out of eight quarters.

While those five stocks all deserve careful watching, the best cybersecurity stock to buy for 2018 is positioned to double...

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The Best Cybersecurity Stock to Buy Now: Raytheon Co. (NYSE: RTN)

Raytheon Co. (NYSE: RTN) is our best cybersecurity stock to own for 2018. And its No. 1 customer is also the largest employer in the world, with more assets than any other company or organization...

The United States government.

Last summer, the U.S. Department of Homeland Security reaffirmed Raytheon's $1 billion contract to safeguard dozens of federal agencies' data and older legacy computers from cybercrime.

Raytheon's cybersecurity division, Forcepoint, grew its revenue from $328 million in 2015 to $566 million in 2016, an increase of 72.56%. While that's a small sliver of the company's $24 billion annual revenue last year, the growth is on pace with the broader cybersecurity sector.

So far this year, RTN shares are up 26%, from $148 to $186.50. But if the company's cybersecurity division continues increasing at about 72% annually, it will become RTN's most profitable segment within six years.

Because of its dominant position within the defense industry, that kind of growth is actually conservative.

Furthermore, RTN pays an attractive 1.7% dividend yield, paid quarterly. With a rock-bottom dividend payout ratio of 41.5% in 2017, Raytheon has plenty of room to fund its growth and continue increasing its dividend.

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