2 Cybersecurity Stocks You Can Buy and Hold for the Next Decade

There's no doubt about it: Cybersecurity is one of the fastest growing sectors. High-profile attacks in recent years by cybercriminals resulted in massive data breaches, infrastructure failures, and billions in costs. Because of these enormous threats, organizations are pouring resources into protecting their digital assets.

Clearly, there are investment opportunities in the sector, but which stocks stand out right now? Well, here is one stock and one exchange-traded fund I think investors should focus on.

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CrowdStrike Holdings

First, there's CrowdStrike Holdings (NASDAQ: CRWD).

When it comes to cybersecurity stocks, CrowdStrike is perhaps the best of the bunch. The company operates an AI-powered platform that helps organizations protect their digital property.

Crucially, CrowdStrike sells its products in modular form, allowing organizations to buy whatever add-ons best fit their needs. Given the growing cost of cybercrime, it should come as no surprise that many organizations sign up for multiple security modules from CrowdStrike.

Indeed, as of its most recent quarter (the three months ending on Oct. 31, 2024), the company reported that 66% of its customers had purchased five or more security modules; 20% purchased eight or more.

As for the company's fundamentals, CrowdStrike's key financial metrics are solid. The company is growing revenue at roughly 27% year over year, with annual recurring revenue now surpassing $4 billion. In addition, free cash flow hit $230 million during the quarter.

Behind the excellent fundamentals is the reality that cybercrime is only growing as a global problem. CrowdStrike, with its AI-powered solutions, is one of the best ways for investors to gain exposure to the rapidly growing cybersecurity market.

Global X Cybersecurity ETF

My second choice is not, strictly speaking, a stock. Rather it's an exchange-traded fund (ETF). It's the Global X Cybersecurity ETF (NASDAQ: BUG).

BUG Total Return Level data by YCharts

The reason why I'm choosing this ETF is that the cybersecurity industry is complex. There are many different companies that operate within the space, including Palo Alto Networks, Zscaler, Fortinet, and Okta, just to name a few.

The benefit of owning shares of this fund is that an investor gains exposure to all of the companies listed above -- and more. All told, the fund invests in 23 cybersecurity stocks, mostly American companies but also some based in Israel, Japan, and South Korea.

Since the fund focuses on a still young and growing sector (i.e., cybersecurity), its holdings are growth stocks which pay little to no dividends. Accordingly, the fund pays a very meager dividend of only 0.1%.

As for fees, the fund has an expense ratio of 0.5%, meaning that an investor will pay $50 annually for every $10,000 invested in the fund. While that fee structure is far from the lowest around (many index ETFs charge less than 0.1%), it is about average for similar sector-focused ETFs.

In summary, this fund is worth considering for investors who want exposure to the cybersecurity sector but who may not be comfortable with one particular stock within the industry. By spreading risk among many companies, the Global X Cybersecurity ETF can help investors benefit from the secular growth trend no matter which company emerges as the clear stock market winner.

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Jake Lerch has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike, Fortinet, Okta, and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.