Is Magnet Forensics Stock Quietly Picking Up the Pace?

Shares of Magnet Forensics (TSX: MAGT) have consistently been trading on a strong note for the last three quarters. After more than doubling in value in the second half of 2022, MAGT stock extended its rally in the first quarter of 2023 by delivering 19% positive returns. With this, it now trades at $44.21 per share and has a market cap of $544 million.

MAGT stock’s spectacular rally in recent quarters

Magnet’s share prices rallied by 115% in the second half of 2022, as the continued strength in its top line and a massive improvement in its profit margin boosted investors’ confidence. To give you an idea, the Waterloo-based cybersecurity software company reported a 45% year-over-year increase in its December quarter revenue to US$31 million. Significant improvement in its software maintenance and support revenue and stable cybersecurity software demand were the key reasons that helped Magnet Forensics beat analysts’ revenue estimates last quarter.

To add optimism, Magnet’s adjusted earnings in the December 2022 quarter stood at US$4.2 million against its US$806 thousand in the same quarter of the previous year. Its latest quarterly earnings figure exceeded Street’s estimate of US$1.9 million by a huge margin. These factors combined have been among the key drivers for MAGT stock in the last few quarters.

While Magnet stock has yielded outstanding returns lately, the opportunity to benefit from its rally is no more open, as recently, its shareholders approved a buyout offer by an American private equity firm Thoma Bravo. After the completion of this takeover, MAGT is expected to become a privately held company.

Here’s how you can benefit from the growing cybersecurity demand

Irrespective of economic conditions, the stock market is always full of opportunities for long-term investors. For example, BlackBerry (TSX: BB) could be a great stock to buy in 2023 to hold for years to come. It’s another Waterloo-headquartered cybersecurity firm that already has a large enterprise client base globally. BB is much larger in size than Magnet Forensics, as its stock currently has a market cap of $3.6 billion.

It’s true that the possibility of a looming recession has forced companies across the world to cut their unnecessary costs to prepare for a tough economic environment, leading to a temporary drop in the demand for BlackBerry’s cybersecurity software in recent quarters. Nonetheless, the long-term demand outlook for its innovative enterprise cybersecurity solutions remains strong, as more businesses than ever are now building their digital presence, and cybercrime incidents are on the rise.

Besides that, in recent years, BlackBerry has increased its efforts to diversify its revenue streams by developing advanced technological solutions for the automotive industry. These efforts could pay off well in the long run by accelerating the Canadian tech firm’s financial growth and reducing its risks.

After losing nearly 63% of its value last year, BB stock has already recovered by about 41% in 2023 so far. But its improving fundamental outlook makes this tech stock really attractive to buy for the long term.