Oliver | MMMT Wealth
Founder of MMMT Wealth, CPA, Technical/Fundamental Analysis
SailPoint and Tenable are the cybersecurity names worth owning, while CrowdStrike at 167x forward earnings, a 6x PEG, and Palo Alto Networks at 89x look far too expensive. SailPoint is the cleanest play on agentic identity, not cheap at 55x earnings but much cheaper than CrowdStrike and Palo Alto with faster forecast growth. Tenable trades at 17x forward earnings with EPS growing about 13%, and its net revenue retention in exposure management just rose above 106%. x.com
Cybersecurity is a clear secondary beneficiary of AI that has been unfairly lumped into the software sell-off. Palo Alto Networks trades at 9x forward sales for about 23% growth, with Rule of 40 scores above 60 and CEO buying. Palo Alto, CrowdStrike and Zscaler are the safe bets; SailPoint is a riskier, high-upside bet that could be strong in agent-to-agent authentication, and SentinelOne is one of the cheaper names but cheap for a reason. x.com x.com
Tenable looks cheap among cybersecurity software names, trading at a lower P/E than Palo Alto Networks and CrowdStrike, a lower forward P/E than Fortinet, and one of the group's lowest PEG ratios. Its chart shows a double breakout from a triangle and range highs, with low cycles and confirming on-balance volume. x.com
OneSpan's subscription and recurring-revenue growth add operating evidence for its place among the identity-security picks. Revenue beat expectations at $63.9M, and full-year revenue, ARR and adjusted EBITDA guidance rose. Mitek and Clear Secure also look attractive. Financial institutions in Korea and India reported breaches; CrowdStrike says the Korean attacker used an AI penetration-testing tool. Binance had not confirmed the suspected hot-wallet hack. x.com x.com
CrowdStrike may distinguish itself from an expensive cybersecurity group by showing more breakneck growth at earnings next month. Fortinet's slowing product revenue exposed how much relentless execution investors had priced into the group's extreme multiples, pulling CrowdStrike down in sympathy. CrowdStrike remains in a higher tier than Fortinet, which itself ranks above SentinelOne. x.com x.com
SailPoint's identity governance position and moderate valuation make it one of the notably good companies for a medium-to-long-term bet on agents. Nanalyze points to solid growth but says slowing growth could explain its valuation discount to expensive cybersecurity peers. x.com
SentinelOne appears undervalued relative to its expected revenue growth. Analysts forecast 19.2% NTM revenue growth, versus 23.2% for CrowdStrike, which trades at a premium on forward EV/sales. x.com
SailPoint is not a favored cybersecurity pick because it faces stiff competition from Microsoft, Okta and CyberArk and is already not cheap on valuation, like others in the space. The leaders CrowdStrike and Cloudflare have been the better exposure, though after their huge run smaller players may make more sense from here; among those, Rubrik was the favorite. x.com
Combining estimated NTM revenue growth with trailing GAAP EBITDA margin makes Palo Alto Networks, Datadog, JFrog, Rubrik and Snowflake look overvalued against forward EV/sales. Zoom, Alphabet, Oracle, AppLovin, Microsoft, Fair Isaac, Adobe, Amazon and Teradata remain undervalued on this Rule of 40 comparison; Palantir, Cloudflare and CrowdStrike remain overvalued. x.com
CrowdStrike, Palo Alto Networks, Fortinet and Okta offer terrible risk/reward because their valuations need a lot to go right. The thesis is correct: more AI agents mean more identities, endpoints and attack surfaces, so security spend should keep growing. But CrowdStrike trades at 147x forward earnings, Palo Alto at 79x, Fortinet at 44x and Okta at 41x. These are good, some exceptional, businesses, yet a great business can still be a terrible investment at the wrong price. x.com
Zscaler likely needs to broaden its product scope, or Palo Alto Networks and CrowdStrike will dominate security through organic growth and acquisitions. Palo Alto grows about 14% organically and mid-20s including acquisitions and, with 4x Zscaler's revenue, commands 10x EV/sales; CrowdStrike, at 2x Zscaler's revenue, gets the same multiple. Scale is being rewarded. x.com
CrowdStrike and Palo Alto Networks need 50%-plus growth to deliver even a 10% IRR over a realistic horizon, but almost no conceivable case gets them there. They feel as dumb as Zoom and Peloton in 2021. Even if revenue doubles over four to five years, Palo Alto would still trade at 10x revenue and CrowdStrike at 20x, leaving little prospect of a real IRR; Palo Alto is growing in the teens today. x.com x.com x.com
