One Clear Winner Amidst the Tariff Tantrum

President Trump’s tariffs have roiled the markets and global economy. Currently, the uncertainty poses significant challenges for investors and businesses, especially given that no one truly knows their final shape and ultimate effects. 

If we assume that current levels hold, most parts of the economy are likely to be in worse shape in a post-tariff world. Consumer prices are likely to rise, supply chains will be disrupted, margins compressed, and economic activity negatively affected. Another risk is decreased demand for US dollars and Treasuries, which could result in structurally higher interest rates.

Yet, these risks are largely known and the impetus for the steep and broad decline in stocks since ‘Liberation Day’. However, there has been much less discussion about which companies and sectors will benefit from this new paradigm.

In my opinion, a big winner will be cybersecurity stocks, notably Radware (RDWR), which is rated a “Strong Buy” according to Zen Ratings. RDWR provides an assortment of cybersecurity services like threat assessment, firewalls, DDoS protection, bot management, and API security. 

But before we dig deeper into the stock, a bit of context. 

If the last 40 years have been defined by increasing levels of globalization, then the tariffs are a move away from that to a more fragmented world with less cooperation and more competition. In this post-tariff environment, competition will intensify at all levels — between nations, 

corporations, and supply chains. 

Cybersecurity becomes increasingly urgent and necessary as businesses and governments seek to protect proprietary data, intellectual property, and critical infrastructure from rivals and bad actors.

A few decades ago, this would have meant more defense spending. In today’s world, conflicts and battles are increasingly fought in the digital realm. Future warfare will likely involve hacking critical infrastructure such as power grids, water systems, or financial networks. In recent years, there have been major hacks of political parties, government contractors, and infrastructure. 

It’s not hard to imagine how digital vulnerabilities can cripple a company or a country, making robust cybersecurity increasingly indispensable.

Even before this catalyst, the cybersecurity industry was booming. Last year, the global cybersecurity market was valued at approximately $245 billion. Over the next decade, it’s forecast to grow at a 13% annual rate, more than 4x the estimated rate of global GDP growth. This rapid pace is driven by rising cyber threats, increased digitization, and the proliferation of IoT devices, with over 75 billion expected by 2025, each a potential entry point for attacks. 

It’s not a coincidence that the Zen Ratings are particularly bullish on cybersecurity stocks given strong fundamentals and attractive valuations. Many cybersecurity stocks have “Buy” or “Strong Buy” ratings. 

Let’s circle back to Radware (RDWR).

According to Wall Street analysts, RDWR has a consensus price target of $27, implying 29% upside. In part, this bullishness is due to expectations that earnings will increase at a 39% annual rate over the next 3 years. 

The Zen Ratings can also be an invaluable tool to identify the best and most resilient cybersecurity stocks within the sector by utilizing their component scores. For instance, investors who are looking for stocks that are well-positioned to outperform amidst the current volatility should prioritize stocks with higher scores in categories like Value, Safety, and Stability.

In contrast, investors who are more interested in finding cybersecurity stocks with the best, long-term prospects should focus on categories like Growth, Momentum, and Artificial Intelligence. And, RDWR is in this high-upside category as A grades for Growth and Artificial Intelligence. 

Take it further: Click here to find the best stocks in the best-rated industries.

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