Shares of cybersecurity leaders CrowdStrike Holdings (NASDAQ: CRWD), Palo Alto Networks (NASDAQ: PANW), and Fortinet (NASDAQ: FTNT) rallied 13%, 6%, and 13%, respectively, this week as of noon ET on Friday, according to data provided by S&P Global Market Intelligence.

The primary reason for these increases is related to a 90-day pause on the newly proposed tariffs that the United States announced, prompting a virtually marketwide rally.

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However, there was also company-specific news that added to this rally.

On Monday morning, Wedbush Securities listed CrowdStrike and Palo Alto Networks as two "defensive" plays in an era of potentially higher tariffs. Then, on Thursday, HSBC upgraded Palo Alto to a hold from a sell while reiterating that Fortinet was its top cybersecurity stock.

Here's why I can't help but agree with these bullish notions on these three stocks.

A trio of defensive growth stocks

These three cybersecurity leaders grew sales between 14% and 25% in their most recent quarters. Despite their status as growth stocks, it is also fair to call each of the businesses a defensive stock, as Wedbush stated.

A recent survey by cybersecurity provider Red Canary of security leaders at an array of businesses found that 63% of companies increased their cybersecurity spending. Still, only 37% thought it was enough to be entirely secure. Cybersecurity spending remains crucial for businesses, with numerous hacks costing hundreds of millions of dollars (if not over a billion) in recent years.

And the need will only become more pressing as we continue to move into an artificial intelligence-influenced world. The same Red Canary survey found that roughly 62% of security leaders said that AI threats make it more challenging to keep their businesses safe.

Simply put, CrowdStrike, Palo Alto, and Fortinet offer investors the best of both worlds: high growth and defensive, recurring sales.

The case for CrowdStrike

CrowdStrike is best known for its leadership in detecting endpoint threats, and its cloud-based Falcon platform is quickly becoming a full suite of cybersecurity safeguards. Its AI-powered platform is a must-have for most of the biggest names in the business world and is currently used by roughly 70% of the Fortune 100, 18 of the top 20 U.S. banks, and 44 of the 50 U.S. states.

The company's newer products for identity protection, cloud security, and security information and event management grew by 70% to 140% since last year, so this notion of a full-suite platform continues to gain momentum.

The stock won't be confused as being cheap, trading at 84 times free cash flow (FCF). But management is forecasting $10 billion in annual recurring revenue (ARR) by 2031 -- up from $3.9 billion today -- so it could quickly outgrow this valuation.

The case for Palo Alto Networks

Palo Alto Networks has generated annualized returns of 26% since its 2012 initial public offering (IPO) while becoming a leader alongside Fortinet in firewall solutions. But this success didn't prevent the stock from being hammered in early 2024 as it shifted from individual solutions to a platform model, which it dubbed "platformization."

This adjustment meant it had to entice many existing customers to come along for the ride by temporarily offering deeply discounted solutions (if not free ones) while they acclimated themselves to the new setup. Just one year later, though, this shift seems to be a success.

The company grew sales, remaining performance obligations (RPO), and next-generation ARR solutions by 14%, 21%, and 37%, respectively, in its latest quarter, so it looks to have made the right move (so far).

It might be a leap of faith for investors to buy tech-dense cybersecurity offerings like Palo Alto, but it has several leadership ratings from Gartner's Magic Quadrant rankings across several niche categories.

Should sales and FCF growth accelerate to match the company's impressive 21% growth in RPOs (a forward-looking metric), it could prove to be a fantastic investment at 40 times FCF, thanks to its mission-critical offerings.

The case for Fortinet

Fortinet and Palo Alto are the two top dogs in their firewall niche. Like Palo Alto, Fortinet has delivered incredible 30% annualized returns since its IPO in 2009.

Both companies hold leadership rankings from Gartner in several cybersecurity categories, so they will always seem to be linked together.

One area where Fortinet is dissimilar -- in a good way -- from its two peers in this article is that it protects shareholder value better. Whereas CrowdStrike and Palo Alto have let their number of shares outstanding rise by 15% and 14% over the last five years, Fortinet has lowered its count by 5%.

This ballooning share count from CrowdStrike and Palo Alto stems from hefty stock-based compensation (SBC), which equals roughly 22% and 13%, respectively, of their total revenue. Meanwhile, Fortinet's SBC only accounts for 4% of revenue. This signals (in my opinion) that Fortinet does a better job of protecting shareholder value.

Fortinet works with 77 of the Fortune 100 and virtually all of the business leaders in each industry, much like CrowdStrike. This scale, paired with the fact that Fortinet has nearly twice as many U.S. patents as CrowdStrike and Palo Alto combined, hints that the company will be hard to disrupt anytime soon.

The stock trades at 39 times FCF, and management is guiding for more than 12% billings growth over the next five years. So it should be a great example of a defensive growth stock.

The final takeaway

All told, I believe buying a basket of this trio of defensive growth stocks might be the way to go.

Although they all compete with one another, the last five to ten years have shown that the rising tide of the cybersecurity industry -- which is growing by double digits seemingly in perpetuity -- is plenty to lift all three stocks' boats, helping them to beat the market.

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HSBC Holdings is an advertising partner of Motley Fool Money. Josh Kohn-Lindquist has positions in CrowdStrike and Fortinet. The Motley Fool has positions in and recommends CrowdStrike and Fortinet. The Motley Fool recommends HSBC Holdings and Palo Alto Networks. The Motley Fool has a disclosure policy.

With the S&P 500 (SNPINDEX: ^GSPC) ending last week down more than 10% in two days, the stock market experienced its first crash since March 2020, when the COVID-19 pandemic began to escalate. The culprit this time was the U.S. enacting punitive tariffs against much of the rest of the world and an ensuing trade war. These tariffs were even applied to two islands uninhabited by humans, with the Trump administration saying the duties were added so that other countries could not evade tariffs by shipping goods through the ports of these islands.

With the market in turmoil and a lot of volatility likely ahead, let's look at four ways investors can navigate the current market crash.

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1. Have liquidity

In a bear market or an impending bear market, one of the most important things investors can have is liquidity, or cash on the sidelines. By having available cash, investors can then take advantage of market dips.

If you're fully invested, consider selling some of your least favorite positions to raise some cash that can later be used to buy ideas you have more conviction in. If these are in a non-retirement account, you'd also get the potential benefit of a tax loss when you next file.

To be clear, you don't want to start panicking and just sell stocks. Instead, you want to look at this as an opportunity to high-grade (improve the quality of) your portfolio.

2. Create a list of high-quality stocks to buy

Another important thing you can do is create a list of high-quality stocks and the prices at which you'd start buying them. Undoubtedly, there have been stocks you've liked in the past, but their valuations were too high.

This could be highfliers like Palantir Technologies (NASDAQ: PLTR) or Cava Group (NYSE: CAVA) whose businesses are doing great but whose stock valuations just skyrocketed over the past year or two. Perhaps it could be stocks in industries that have always tended to have high multiplies, such as cybersecurity companies like CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW). There could also be blue chip tech names like Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Amazon (NASDAQ: AMZN) whose stocks have just gotten cheaper, given their collection of businesses and future prospects.

The key, though, is to gather a list of high-quality stocks you'd be comfortable owning over the long run. And then, when they reach your price target, be ready to start building positions in them. Just do the research beforehand so you're ready to pounce.

3. Consider writing puts

A more advanced strategy to use in a down market is to write (sell) put options. By writing a put option, you collect a cash premium up front, but you are then obligated to buy that stock if the buyer exercises his option to sell it to you. As such, you want to do this only with stocks and at prices where you would want to buy them.

For example, if Amazon was on your list of stocks to buy at $150, you could write a put on Amazon stock with a strike price of $150 and a May 9 expiration and collect around $3.70 in premium. If the stock falls below $150 and the option is exercised, you'd own the stock at $150. Note that each option represents 100 shares. If Amazon doesn't fall to that price, you just collect the premium, which would be worth around $370 for each option.

This strategy's intention is twofold. One is to let you buy into a stock you want to own at a lower price. However, if the stock never reaches that price, you still earn some return.

The downside to this strategy is that it does tie up some capital, which you could potentially use elsewhere. That is why I prefer to keep the expiration dates short, at about a month.

In addition, if the stock blows past your price target on the downside, you are still obligated to buy at the strike price. This is most likely to occur if a major event happened when the market was closed, and it opened way down. However, the assumption we are using is that you'd be a buyer of the stock at the strike price regardless. The other disadvantage is that if the market does make a quick reversal, you would lose out compared to if you had jumped in right away and bought the stock.

However, this is a nice strategy to supplement your investments, allowing you to earn some extra cash as you wait for stocks to hit your buy prices.

4. Dollar-cost average with ETFs

Another strategy investors should consider is dollar-cost averaging. In this strategy, you make investments at set times and dollar amounts regardless of their prices.

This strategy works particularly well with exchange-traded funds (ETFs) such as the Vanguard S&P 500 ETF (NYSEMKT: VOO) or the Invesco QQQ ETF (NASDAQ: QQQ). These two ETFs track major market indexes that have proven to be long-term winners. The Vanguard ETF tracks the S&P 500, which comprises the 500 largest stocks traded in the U.S., while the QQQ ETF tracks the Nasdaq-100, which is more tech- and growth-oriented.

With ETFs, you don't have to worry about individual stock research. You can buy an ETF that immediately gives you a portfolio of leading stocks. Consistently dollar-cost averaging into index ETFs is a great way to build long-term wealth, and a down market is a great place to start implementing this strategy.

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Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $590,231!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet, Invesco QQQ Trust, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, Palantir Technologies, and Vanguard S&P 500 ETF. The Motley Fool recommends Cava Group and Palo Alto Networks. The Motley Fool has a disclosure policy.