The COVID-19-related shutdowns and restrictions badly affected businesses across the globe. These restrictions amid new technological innovations acted as the big catalyst for digital transformation as businesses were forced to adapt to new technology and build their online presence. This is one of the key reasons why more companies than ever are using cloud-based software solutions to operate today.
But does this digital transformation trend make Canadian cybersecurity stocks attractive? Let’s find out.
Surging demand for cybersecurity services
The recent rapid digital shift has also brought big challenges for businesses in the form of cyber threats, as cybercriminals are actively targeting vulnerable remote systems and cloud services. With this, the demand for enterprise-level cybersecurity solutions has surged in recent years and is expected to grow further in the next decade.
Fast-growing demand could be the main reason why large institutional investors are increasingly taking an interest in acquiring small cybersecurity firms in 2023. For example, an American private equity firm Thoma Bravo recently acquired Magnet Forensics, a Canadian digital investigation solutions provider, which was earlier listed on the Toronto Stock Exchange with its ticker symbol “MAGT.” Similarly, on May 11, another Canadian cybersecurity-focused company, Absolute Software, announced that it has agreed to be acquired by a U.S.-based private equity firm Crosspoint Capital Partners.
Considering these developments, it makes sense for long-term investors to consider investing in cybersecurity stocks, as growing demand can boost their financial growth in the coming years and drive their share prices higher.
Now, let me quickly highlight one of the best Canadian cybersecurity stocks to buy right now to hold for the long term.
The best Canadian cybersecurity stock to buy now
If you’re looking to benefit from the consistently growing demand for enterprise cybersecurity services, BlackBerry (TSX:BB) could be the best Canadian cybersecurity stock you may want to consider right now. This Waterloo-headquartered cybersecurity company currently has a market cap of $4.2 billion, as its stock trades at $7.24 per share after rallying by nearly 64% in 2023 so far.
Besides its focus on the IoT (Internet of Things) segment, BlackBerry’s fast-growing global presence in endpoint security and managed security services makes it stand out from the completion. The Canadian cybersecurity firm already has a large number of global clients, including government agencies, financial institutions, and other large public and private enterprises.
Although macroeconomic challenges and the possibility of a recession have driven BB’s cybersecurity segment revenue down in recent quarters, these challenges might not have a major impact on its long-term growth potential. In the next three years, the company expects its cybersecurity revenue to grow at a compound annual growth rate of 9-12%, with expected gross margin expansion between 400-600 basis points.
As the global demand for innovative enterprise cybersecurity solutions continues to grow, achieving these financial targets shouldn’t be a big challenge for BlackBerry, I believe. Besides that, its strategy to focus on cost optimization and targeted investments should boost its financial growth further in the years to come, making this Canadian cybersecurity even more attractive.