In this article, we discuss 5 best cybersecurity stocks to buy now. If you want to see more stocks in this selection, check out 13 Best Cybersecurity Stocks to Buy Now.
5. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 43
Fortinet, Inc. (NASDAQ:FTNT) is a California-based provider of automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. On August 23, Fortinet, Inc. (NASDAQ:FTNT) announced that it will jointly develop secure 5G networks for communication service providers as part of a global agreement with NEC. The former will offer security solutions, including its next-gen firewall FortiGate, while NEC will provide its expertise in the telecom industry to build carrier-grade, sustainable networks for deploying 5G technology.
On September 16, MKM Partners analyst Catharine Trebnick initiated coverage of Fortinet, Inc. (NASDAQ:FTNT) with a Buy rating and a $70 price target. The analyst is optimistic about the company’s position amid network security consolidation. The analyst also believes that there are sufficient growth drivers for Fortinet, Inc. (NASDAQ:FTNT) to sustain revenue growth of more than 20% beyond FY 2023, which is modestly above Street consensus.
According to Insider Monkey’s data, 43 hedge funds were bullish on Fortinet, Inc. (NASDAQ:FTNT) at the end of June 2022, up from 39 funds in the earlier quarter. Jim Simons’ Renaissance Technologies held the biggest position in the company, comprising 4.8 million shares worth $272.3 million.
Here is what ClearBridge SMID Cap Growth Strategy has to say about Fortinet, Inc. (NASDAQ:FTNT) in its Q3 2021 investor letter:
“Performance among our cohort of IT and Internet companies was mixed, with enterprise software makers thriving while more consumer-oriented stocks faced headwinds. Cyber security software maker Fortinet benefited from a heightened awareness of the need to protect against sophisticated attacks. We are attracted to the recurring revenue nature of these software companies that are increasingly delivering their products on a subscription basis through the cloud. Software business models also tend to avoid many of the inflationary issues facing companies with a physical product or service.”
4. Splunk Inc. (NASDAQ:SPLK)
Number of Hedge Fund Holders: 47
Splunk Inc. (NASDAQ:SPLK) was incorporated in 2003 and is headquartered in San Francisco, California. The company provides software and cloud solutions that deliver and operationalize insights derived from data generated by digital systems in the United States and internationally. Splunk Inc. (NASDAQ:SPLK) recently reaffirmed its Q3 and FY23 guidance. It is one of the best cybersecurity stocks to buy now.
On September 27, Canaccord analyst Kingsley Crane told investors that Splunk Inc. (NASDAQ:SPLK) CFO Jason Child is leaving the company in early November. The analyst said while the timing of the CFO’s departure is unexpected, it will not have a meaningful impact on shares. He reiterated a Buy rating and a $130 price target on Splunk Inc. (NASDAQ:SPLK) shares.
Among the hedge funds tracked by Insider Monkey, Splunk Inc. (NASDAQ:SPLK) was part of 47 public stock portfolios at the end of Q2 2022, compared to 42 funds in the preceding quarter. Alex Sacerdote’s Whale Rock Capital Management is the biggest stakeholder of the company, with 2.7 million shares worth $243 million.
Here is what Vulcan Value Partners has to say about Splunk Inc. (NASDAQ:SPLK) in its Q2 2022 investor letter:
“Splunk Inc. is a software company for managing and gaining insights from data. Despite being a material detractor during the quarter, Splunk reported better than expected revenue, margins and guidance. Revenue increased 34% and the company produced a 20% free cash flow margin. Additionally, Gary Steele started his position as the new CEO. Gary was the founder of Proofpoint and led that company for 20 years prior to selling it to Thoma Bravo for $12 billion last year.
We believe Splunk’s long-term prospects remain strong. As they have transitioned their customers to the cloud, the company is generating good free cash flow and its margins are increasing and have the potential to expand. The company has a solid competitive position, a large market, and we expect its growth to be strong and durable.”
3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a Texas-based company that provides threat intelligence, managed security services, IT operations management, threat hunting, Zero Trust identity protection, and log management. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) announced on September 20 a deal to acquire the cybersecurity startup, Reposify. Reposify’s EASM capabilities will help advance CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s Threat Intelligence and Security and IT Operations product suites.
On September 21, BTIG analyst Gray Powell maintained a Buy rating and a $234 price target on CrowdStrike Holdings, Inc. (NASDAQ:CRWD). The analyst said that the discussions with management have made him more confident in CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s growth potential and its ability to withstand higher IT budget pressure amid a weakening economy.
According to Insider Monkey’s data, 77 hedge funds were bullish on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) at the end of Q2 2022, compared to 80 funds in the last quarter. Chase Coleman’s Tiger Global Management is the leading position holder in the company, with 6.5 million shares worth $1.10 billion.
Here is what Carillon Tower Advisers specifically said about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2022 investor letter:
“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a security software platform for protecting information technology assets and cloud workloads, delivered strong earnings results, with solid recurring revenue, customer growth, and profitability. Some investors, however, hoped for bigger numbers on the annual recurring revenue metric. Additionally, CrowdStrike has shown a desire to continue to hire to fuel growth, and so the expected increase in future profitability will be held back somewhat in the near term. We remain positive on the company’s prospects, as current geopolitical tensions make cyber security mission-critical.”
2. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 90
Palo Alto Networks, Inc. (NASDAQ:PANW) was incorporated in 2005 and is headquartered in Santa Clara, California. The company provides cybersecurity solutions worldwide. On September 19, Palo Alto Networks, Inc. (NASDAQ:PANW) announced that it is about to close a deal to acquire Israeli cybersecurity startup Apiiro for approximately $600 million.
On September 16, MKM Partners analyst Catharine Trebnick initiated coverage of Palo Alto Networks, Inc. (NASDAQ:PANW) with a Buy rating and a $250 price target as part of a broader research note on the Cyber Security Software Sector. Palo Alto Networks, Inc. (NASDAQ:PANW) is her top pick in the industry, due to the company’s 75% revenue from subscription services, the analyst told investors. The analyst further cited Palo Alto Networks, Inc. (NASDAQ:PANW)’s land-and-expand strategy, that is adding value to Network Security, Prisma Cloud, and Security Operations.
According to Insider Monkey’s second quarter database, 90 hedge funds were bullish on Palo Alto Networks, Inc. (NASDAQ:PANW), up from 87 funds in the prior quarter. David Blood and Al Gore’s Generation Investment Management is a prominent stakeholder of the company, with 733,482 shares worth $362.2 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Palo Alto Networks, Inc. (NYSE:PANW) was one of them. Here is what the fund said:
“The portfolio also saw solid performance from cybersecurity names Palo Alto Networks, Inc. (NYSE:PANW) which is gaining prominence as the risk of global cyber attacks increases as part of the Russian offensive. On an individual stock basis, leading contributors to absolute returns in the first quarter included positions in Palo Alto Networks.”
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG), the American technology conglomerate, announced in March 2022 that it will purchase the cybersecurity firm Mandiant Inc. for $23 per share in cash. The total value of the acquisition was $5.4 billion. The Mandiant purchase will result in Alphabet Inc. (NASDAQ:GOOG) providing higher data security to its clients and it was Alphabet’s foray into the booming cybersecurity space.
Tigress Financial analyst Ivan Feinseth on August 3 raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $186 from $183 and kept a Strong Buy rating on the shares, citing the resiliency of its core business in Cloud and Search and the ongoing investment in Artificial Intelligence, which continues to drive “increasingly focused and helpful experiences for users and businesses.”
According to Insider Monkey’s data, 153 hedge funds were long Alphabet Inc. (NASDAQ:GOOG) at the end of the second quarter of 2022, compared to 160 funds in the last quarter. Chris Hohn’s TCI Fund Management is one of the leading position holders in the company, with 2.5 million shares worth $5.4 billion.
Here is what Distillate Capital has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q2 2022 investor letter:
“The largest adds were Alphabet, the parent of Google, and Meta, formerly called Facebook. Alphabet came into the portfolio at the last rebalance after Q1 2022, but was increased again as valuation improved with a decline in enterprise value despite rising free cash flow estimates. Figure 13 plots the indexed change in Alphabet’s enterprise value and free cash flow estimates since the start of the year and the overall result looks very similar to the lines for Apple on the previous page. In conjunction with the stability in cash flows highlighted earlier, this makes Alphabet look very appealing. In contrast to Alphabet, Figure 14 shows the same indexed enterprise value and rolling next-twelve-month consensus estimate for free cash flow for Amazon, and highlights how Amazon’s performance has largely followed downward revisions in its estimated profitability.”
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