UK cybersecurity stocks to buy for 2022 and beyond

Cybersecurity is a hot topic right now. With cyber attacks playing a major role in the conflict between Russia and Ukraine, experts fear these attacks could spread to the rest of the world.

I’ve been bullish on the cybersecurity sector for years, and with cyberattacks currently a major threat around the world, I think it’s a good time to revisit the topic. With that in mind, here’s a look at how I would invest in UK cybersecurity stocks today.

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UK cybersecurity stocks

If I were looking for a “pure” UK cybersecurity stock, that’s where I’d start Avast (LSE:AVST). It is one of the world’s largest affiliates with over 400 million users worldwide. It has a track record of consistent growth, a solid balance sheet and a high level of profitability.

Last year, Avast received a takeover bid from a competing giant NortonLifeLock (which indicates that it is doing something right). However, UK regulators recently put the deal on hold amid concerns it could hurt competition in the industry. As a result, Avast’s share price has fallen.

I would buy AVST stock while it’s down. Post the pullback, the stock’s price-to-earnings (P/E) ratio is below 20. I think this valuation is attractive.

It should be noted that there are a number of other pure-play cybersecurity stocks listed on the London Stock Exchange, including NCC group, Kape Technologiesand dark trail.

However, these companies are not as profitable as Avast. Darktrace is not profitable at all. Therefore, I would buy them less for my portfolio.

Cyber ​​security threat

Another way to play the cybersecurity theme is with IT infrastructure companies. These are companies that provide technology solutions to other companies.

Some examples are here FTSE250 companies soft cat and data center. Both companies support public and private organizations in their IT services, including cybersecurity.

I think these stocks have a lot of appeal. Both expect solid growth in the coming years as companies undergo digital transformation. However, if I had to choose one today, I would probably choose Computacenter. It has a lower rating than Softcat.

Defense companies can also offer some cybersecurity risk. BAE systems, for example, is a leading provider of cyber, intelligence and security capabilities. This is another stock I would consider adding to my portfolio. However, it has had a good run lately, so I might wait for a pullback before buying.

A dynamic industry

It’s worth noting here that investing in cybersecurity can be a little tricky. Because cyber threats are constantly evolving. Because of the dynamic nature of the industry, it can be difficult for companies to build lasting competitive advantages. As a result, individual stocks quite often underperform at times.

To get around this, I would consider investing in a cybersecurity-focused exchange-traded fund (ETF) that offers exposure to a wide variety of stocks. An example of such an ETF is the Legal & General UCITS Cyber ​​Security ETF. This would give me exposure to a wide range of cybersecurity stocks (including internationally listed stocks) and thus reduce stock-specific risk. UK cybersecurity stocks to buy for 2022 and beyond

Gary B. Graves

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