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My portfolio is up as much as 20% in one stock today. Five stocks alone, $21,000 in profits today alone. That's all on news. And two cyber security companies, Crowdstrike and Octa. Here we see Crowdstrike holdings up 14% today alone. We see Octa up 19%. On blowout earnings for both of those, as well as what Crowdstrike is calling its mythos moment. I'm going to explain what that means, how it affects the cyber security companies, and what I've been talking about over the last six months at least. Then I'm going to update you on these five stocks, cyber security stocks that I own, and which one I'm buying right now. This all started last night with earnings from Crowdstrike and Octa, that's Crowdstrike, ticker CRWD, jumped 11% in the aftermarket. So, we can see here today already up 14% on what management is calling its mythos moment and a giant giant pop in earnings. what I've been talking about over the last six months and really over the last year. You can you can remember in October of last year, these cyber security companies started selling off hard on the fear that AI was going to replace a lot of that software, the software that these companies were selling to enterprises. I argued just the opposite that AI was going to create this moment where those hacking tools would become so powerful that companies would need an increase by orders of magnitude in how much they're spending on their cyber security revenues for these companies. We can see here in Crowdstrike's earnings revenue jumped 26% in first in the second quarter alone there $1.17 billion from a year ago. Earnings per share 31 cents adjusted versus 29 cents expected. Even better here, Crowd Strike lifted its fullear revenue outlook to about $6 billion in adjusted earnings for A125 to A126. It topped the 59 5.93 billion revenue estimate and the$123 EPS estimate before that. And we can see here this is all on what management is calling its mythos moment translated into mass market acceptance and AI adoption needs for security and that's crowdstrike. Again, this is exactly what I've been talking about over at least the last 3 to 5 months when we heard from Palo Alto chief technical officer there Lee Clarish saying that companies had a window of 3 to 5 months to really ramp up their cyber security spending before these these AI security threats were coming. Okay. Crowd Crowdstrike and Palo Alto Networks, the only two cyber security companies that were giving an inside look into the the anthropics uh mythos model. The basically the model that started all of this started those fears of hacking into uh into companies because that mythos model was so powerful. Those two companies got an inside look, got a backdoor look before that model was released. And uh and here we see Lee Claric saying that that a narrow 3 to fivemonth window for businesses to get ahead of these AIdriven exploits. Here we can see they're talking about that secret meeting between the cyber security companies, between Anthropic with its mythos model and even some of the the White House me leaders, the bank leaders there. Rise of increasingly sophisticated AI models such as Anthropox myth mythos has raised the stakes putting pressure on cyber security teams to to step up their defenses as they brace for that wave of cyber attacks capable of exploiting previously unknown software vulnerabilities. That's only half the news for these stocks though today. The other half is what could be a wave of acquisitions and consolidation in the industry driving up prices. Something again that I've been talking about over the last year, especially when I started talking about Octa Inc. here, ticker Okta. Today, last night, Octa reported its earnings just like Crowdstrike did. Shares surged 20% in extended trading after it reported uh earnings per share of A$15 per share. That was uh versus 97 cents expected. Revenue of $85 million versus 79 $795 million. That was revenue increase of about 11% on that. Octa not growing quite as fast as some of these other cyber security companies because it plays in a very small very limited space within the cyber security market that identity access and management market. Going to talk about why that's so important for octa though and why this new secret news came uh came to light that I've been talking about and really boosted the shares 20% today. The bigger news for Octa though was that Palo Alto Networks actually held acquisition talks with the company back in 2024 2025 in uh to to acquire the company for its identity access management lead. This is what I've been talking about since talking since recommending Octa last year is that this company is primed for an acquisition with this with the revenue explosion for all cyber security companies. I think that that even becomes more u more valuable right now. I think we're going to see a a wave of acquisitions and consolidations in this uh in this industry just as these uh as all these companies really jockey for position in this growing market. But we did hear that Palo Alto Network CEO held acquisition talks with both Octa and Data Dog. We can see that here 2024 to 2025 they uh they talked to CEO Todd McKinnon. The talks progressed to the point where the companies were actually discussing product complimentarity but ultimately stalled over price agreements. Okay, what happened here? What I think happened is uh Octa looked at its dominance in this identity access and management market. Okay, second only to Microsoft. Here we can see the the pie chart of market share. Who controls this market? Microsoft has a commanding lead 30%. But octa very nice lead here 11% market share that is much larger than any of these companies. We know that at the time that PaloAlto was also talking to cyber cyber arc security, right? This is another company within this identity access management market. Only a 3% market share though, very much smaller. They were talking to both companies. I think Octa said, "Hey, you know what? 11% of the market share that is a commanding lead. We can we have a lot of competitive advantage here. We want a better price." Okay, they were they were a little bit more demanding as far as the size of the ring that you put on its finger, right? Cyber Arc maybe came a little bit more cheaply, right? So we did see Palo Alto ultimately go with Cyber Arc paid about $17 billion for that company. The stronger revenue growth, the stronger revenue growth for the entire industry. The growing backlog of orders for Octa, I think this all puts it back on the acquisition target list, maybe even for Crowdstrike holdings. Maybe Crowdstrike comes in with its dominance in so many of these other segments within cyber security, but not in identity access. I think that makes Octa still a target and still a good buy at this point. Again, I've been saying cyber security is my favorite long-term growth theme for more than a year now. And I think that continues for at least the next two to three years on that growing threat from AI. As these AI models get stronger, companies are going to rush to these cyber security companies for for all the protection that they need. You can see some of these stocks. I hold five stocks in the cyber security space. No need to really pick a an ultimate winner when they're all doing so well. But we are going to compare them head-to-head next. I'm going to show you which one I'm adding more onto right now. But we can see here largest uh largest position here is uh CrowdStrike here, $83,000 in that 82% return, $7,500 up just today. That's on that 10% return so far. Fortnite with the really the profitability king of the group. Little bit slower revenue growth, but very strong profitability there. Up 82% since I started buying that one. Octa the darling for today up 20% just today alone $8,000 return or profit today up 66% that one had been lagging just on that slower growth in the identity access management area but I think again I think that acquisition news that Palo Alto was interested in it I think this larger broader growth in the cyber security space I think it puts this company back on the acquisition target list then we see Zcaler here the lagard of the group and honestly probably the most exposed to any kind of an AI software threat. Okay, if AI was going to replace any of these companies, it would be Zcaler, but I think you still have a very strong upside and probably rebound potential in this one. That stock up 5% for the day. It's up 30% since I started buying it. And the best return here up 136%. Palo Alto Networks, the largest company in the space, up 5.6% uh this today. We'll see its earnings and Zcaler's earnings next week. So, very important. I'm going to be updating the those earnings reports of this Sunday before the week starts. So, be watching for that because uh these these could report big earning surprises as well. I'm going to compare all five of those cyber security stocks side by side next and show you the one that I'm adding to right now. First though, if you haven't already yet, use the special invite link below to join me on the Blossom Investing app and and see every stock in my portfolio. It's totally free to use and does help support this channel, so I appreciate that. You'll also be able to see what over 500,000 investors are talking about in the social feed. So, look for that link below or just scan the QR code here. So, I've got six cyber security companies side by side here. Palo Alto Networks, ticker PW, Crowdstrike Holdings, CRWD, Zcaler ZS. Octa Inc., ticker Okta, Fortnet, FTN, and I've included Cloudflare Inc. here, ticker NE. Now, Cloudflare started as more of a cyber security company. They've since moved way beyond that into uh into internet services and technology infrastructure. Now I do like Cloudflare here, ticker NE, not necessarily as a cyber security company. I think they've diluted that theme quite a bit with their other offerings. So it's not really something I want to look at if I'm looking at a pure play cyber security company. Where I do like Cloudflare in though is this uh this move to value maxing in token use for AI. Okay, if you don't know, a lot of companies rushed into AI with their agents, were spending millions of dollars on uh running those AI agents and it just got out of hand. Well, what Cloudflare does, it sits in between the company and its agents and that and that model. Okay, the anthropic models, the open AI models that run those those agents for the companies. What Cloudflare will say is that, hey, you've got this agent. Let's put it on this platform or on this model instead of the other one because it's much cheaper. Okay, Cloudflare might orchestrate or might route that that agent to maybe an open- source model or uh or one of these other models. It can save a company a lot of money in its AI use. I think that's where Cloudflare really shines here and really where it's going to come in over the next uh 6 months to a year. So, I do like Cloudflare not as a cyber security company here, but I do like the shares there. We can see the year-to- date chart here for these cyber security companies. We can see here year-to- date Fortnet doing the best 98% up. Apollo Alto very close behind 84% Crowdstrike 61%. Now, this doesn't include the big bump today that we saw from Crowdstrike. We can see that move brings Crowdstrike up to about 87%. Let's try to update this. Uh see if we can do a one-day chart here. It's a one day. That doesn't include the uh Oh, I guess it does. Palpo Alto Networks up 10%. Crowd Strike up 16% right now as we're as we're filming this. Uh Octa up 24%. Zcaler 10%. Fortnet 4% uh and Cloudflare up 5%. So really getting a boost today. Those numbers year to date. We can go back here and look at these. We can still see, okay, Octa doing very well. 55% Cloudflare up 44%. Now, Zcaler, like I said, the lagard of the group really still struggling under those fears that AI is going to replace some of the software uh promoted by these companies down 24%. I think there is still a lot of value left in shares of Zcaler. But what we want to do, we want to compare these on their fundamentals side by side. So, I'm going to go first here at growth. That's what it's all about for these companies. the growth in revenue for these, how they can grab that rising market share from the uh the from the AI threat and and really take that growth, convert it into uh into revenue. So, we're going to look at growth, profitability, and then valuation for this forward estimates here. 19 almost 20% for PaloAlto, 22% for Crowdstrike, 21% for Zcaler. So, that's kind of surprising here that Zcaler has lagged so bad, but analysts still see it growing its revenue by 21% a year. So there is a huge disconnect between the price performance of this stock and its fundamentals. Octo only about a 10% growth here. We see it did 11% there in the uh most recent quarter. On that on that increase we see that backlog of orders that should keep this at 10 or even even this higher 15% revenue growth. Fortnet 14% and Cloudflare 30%. But that's also with a lot of its other business lines. So we can see here really the dominant players Zcaler, Crowdstrike and Palo Alto with 20% plus revenue growth expected for this year. Crowdstrike far and away the the best platform there with its Falcon platform. Palo Alto really has the size advantage of being the largest in the uh in the industry really able to dominate multiple multiple segments within cyber security. Zcaler I think probably the undiscovered one here. But let's look at profitability so important for these because one problem with cyber security companies is so many of them are spending so much of that revenue to uh to grab that market share. Okay, they're spending it on R&D create these new uh these new platforms. They're spending on marketing and sales. So what we see here is this EBID margin. This is your main uh earnings margin. Okay, earnings before interest, taxes, depreciation and amortization. It's really what the company is converting that revenue into earnings. And we see a big discrepancy here. We can see Palo Alto pretty good at 14%. But then you get to Crowd Strike, you get to Zcaler, 1% uh earnings margin for Crowd Strike, just negative one negative -2% for Zcaler. Okay, so into uh into spending more than it's actually earning there in sales. Octa 9% there. Fortnite again like I said the leader the the far and away leader in profitability 35%. Now there it does sacrifice a little bit of go growth okay as we saw with those with that growth here only growing at about 15% pace a year versus 20% plus for some of these others but it is converting a much higher share of that into profit. So definitely one you you want to keep on your list for that profitability. Then we know this all has to come back to valuation though because even a great company can be a bad stock if it's too expensive. And we see here a lot of these you're going to pay for that growth. You're going to pay for that long-term theme in cyber security. Again, my favorite long-term growth theme because these that that growth in revenue is unstoppable. Companies cannot cut their cyber security budget or they get hacked. So you and you're going to pay for that growth. You see price toearnings valuation on these. Again, that is the price of the stock divided by the earnings generated. Okay? So, it's a core measure of valuation. How much do you have to pay per dollar in earnings to buy that stock to buy that that future earnings growth? Okay? And you can see here 90 times $90 for PaloAlto, $90 for every dollar in earnings you're paying there. $153 for Crowd Strike, 41 for Zcaler, relatively cheap just because it's lagged so badly. Octa, again, a little bit slower growth, a very much more limited market, only 35 times price to earnings. Fortnite there, 45 times. Little bit cheaper than some of the some of the leaders here, but still not cheap on a price to earnings basis. But folks, one of the biggest mistakes I've ever made, especially with shares of Amazon, is relying on that price to earnings basis to make all my investing decisions. Okay? Yes, they these are expensive, but this growth is unstoppable. And so, you want a part of that in your portfolio. You don't want to just totally ignore these because they look expensive. Because if you wait if you're waiting for these stocks to become uh cheap on a price to earnings basis, like 10 or 15 times price to earnings, you will never buy these stocks and you won't have that that tripledigit percentage return that we've seen over the last year. You just have to adjust these for growth. You got to find the ones that are the best deal for that growth and you got to hold your nose and you got to buy into some of these. Okay. So what we want to do, we want to look at the price to earnings to growth. This PEG non-GAAP basis on a forward basis. Okay, what this does, it takes that PE number. Okay, so it takes that valuation. What are investors having to pay for every dollar in earnings to buy these stocks? How expensive are they on that valuation and it adjusts that for earnings growth? Okay, that's important, right? If you have two stocks, each one priced for each one priced for 20 times price to earnings, that doesn't really tell you which one is the better deal. What you do is you look at okay which one is growing those earnings faster. You are ultimately as an investor buying those future earnings as an investment. Okay. So you want faster earnings growth. I would much rather pay uh a higher price to earnings. So a higher price for every dollar in earnings if those if that company is going to be growing those earnings much faster. And that's what we see with this price toearnings adjusted for growth basis. Here we see adjusted for their earnings growth. Palo Alto trading for about 5.16 times. Crowd Strike 5.4 times. So what is really interesting here is yes, just going off that PE basis, Palo Alto the better deal, 90 times price to earnings, much cheaper than than having to pay $153 for every dollar in earnings for Crowd Strike. But if you adjust for the faster revenue or faster earnings growth, the faster profit growth of CrowdStrike, they become very much closer. Okay, PaloAlto is still a little bit cheaper there compared to Crowdstrike. But again, I do like Crowd Strike Crowd Strike better on its uh on its Falcon platform. Looking at these others though, you get an even better deal. Okay, 2.2 times price to earnings adjusted for growth here for Zcaler, 2.4 times for Octa, 2.9 times for Fortnite. Fortnite actually used to be the less least least expensive of this group, but that stock has just really taken off now at almost three times price to earnings adjusted for growth. 2.2 2 for Zcaler and 2.44 for Octa. Now, what I'm what I'm thinking here is I like Zcaler on that that less expensive valuation. Okay, just paying paying only 2.2 times price to earnings adjusted for growth that is on that 21% revenue growth that is on that strong earnings growth that we're seeing that and just the broader upside and the broader potential in cyber security. I really like Zcaler here. I think that has a lot more further to go actually like Octa even after this 24 24% run today just because I do think it becomes a takeover target. I think you you start seeing other companies come out and talking to management about taking that company over and I think it's right here at a 2.4 times price to earnings adjusted for growth. I think that is a great deal and I think this stock continues to run higher. Look for the link in the description and join me on the Blossom Investing app. Totally free to download and use.