12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds

1) Cisco Systems, Inc. (NASDAQ:CSCO)

Forward P/E as of November 20: ~15.8x

Number of Hedge Fund Holders: 60

Cisco Systems, Inc. (NASDAQ:CSCO) provides enterprise network security, software development, data collaboration, and other related services.

Cisco Systems, Inc. (NASDAQ:CSCO)’s focus on AI infrastructure and security seems to be paying off, with strong demand from webscale customers and a more than doubling of security orders, partly because of the integration of Splunk. Excluding Splunk, growth in security product orders was fueled by Cisco Systems, Inc. (NASDAQ:CSCO)’s renewed security strategy and new product pipeline.

The company continues to see momentum around its new security products like XDR, Secure Access, and Multicloud Defense with more than 1,000 customers deploying these products. Wall Street analysts remain optimistic about Cisco Systems, Inc. (NASDAQ:CSCO)’s acquisition of Spunk. This will enhance Cisco’s capabilities in data analytics and security and open up new revenue streams.

As cyber threats become more sophisticated, Cisco Systems, Inc. (NASDAQ:CSCO)’s integrated security solutions might see higher demand, fueling customer loyalty. The company’s platform-centric approach, primarily in security, should simplify customer experiences and drive increased sales. This strategy can result in improved customer retention and upselling opportunities, resulting in sustained profitability.

The London Company, an investment management company, released Q3 2024 investor letter. Here is what the fund said:

“Exited: Cisco Systems, Inc. (NASDAQ:CSCO) – Sale reflects slowing growth prospects and risk of value-destroying M&A. Valuation of the shares is attractive, and CSCO offers a 3.3% dividend yield at the current price, which makes it a more attractive holding for our Income Equity portfolio.”

While we acknowledge the potential of CSCO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CSCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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