Apps & Software

Goldman Sachs Sees Cybersecurity Demand Exploding: 5 Red-Hot Stocks to Buy Now

Technology has been a big winner in 2021, and the same is expected for 2022 and beyond, as many of the top software stocks already have had an outstanding year. It continues to be critical for companies and governments to protect data and to keep malicious hackers and malware from invading information technology systems, infrastructure and critical sensitive data.

In a new research report, Goldman Sachs remains very positive on the top cybersecurity and analytics stocks, and with good reason. The rate of serious security problems has increased, and top management will not remain long at major U.S. companies if the ultimate effort for security and safety is not undertaken. Goldman Sachs noted this when discussing demand for the rest of the year and beyond:

As companies reported results for the second calendar quarter, we saw evidence that digital transformation, expansion of attack surfaces, an elevated threat environment, and widely publicized security incidents continue to drive accelerated demand for Next Generation security. However, we also saw confirmation that we are in the middle of one of the most substantial firewall-related spending cycles we’ve seen in years. Demand during the first quarter of this year was stronger than seasonally expected as the majority of vendors within our coverage group beat expectations. We saw demand continue to accelerate in the second quarter, and those vendors better positioned to benefit from these secular drives saw year-over-year growth accelerate with share gains supported by better cross-sell, up-sell, and new business.


The analysts say now is the time to own security software stocks, and these five are outstanding ideas for aggressive growth investors looking to add this hot technology silo. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AvePoint

This very off-the-radar company could be a big winner. AvePoint Inc. (NASDAQ: AVPT) provides Microsoft 365 data management solutions worldwide. It offers a suite of software as a service solutions to migrate, manage and protect data. The company provides cloud solutions for Office 365, Salesforce and Dynamics 365, as well as hybrid/on-premises products. It also offers advisory and implementation, maintenance and support, Microsoft Teams surge and advisory, migration as a service and quick-start services.

Earlier this year, the company announced the completion of its previously announced business combination with Apex Technology Acquisition, a publicly traded special purpose acquisition company (SPAC).

Goldman Sachs is very positive and said this when it started coverage on the stock this summer:

We initiate coverage of AvePoint with a Buy rating. The company delivered total revenue of $151.5 million last year and accelerated annual recurring revenue growth to 33.2% year-over-year this past quarter. The stock has remained relatively undiscovered due to its recent emergence as a public company via SPAC transaction in our view. We believe the pace of digital transformation, accelerated by COVID-19, coupled with growing Office 365 adoption will continue to serve as secular tailwinds for AvePoint.

Goldman Sachs has a $17 price target on AvePoint stock. The consensus target is lower at $15.38, and the shares closed on Monday at $9.83.