5 Best Cybersecurity Stocks to Buy Now

In this article, we will discuss the 5 best cybersecurity stocks to buy now. If you want to explore similar stocks, you can go to 12 Best Cybersecurity Stocks to Buy Now.

5. Splunk Inc. (NASDAQ:SPLK)

Number of Hedge Fund Holders: 52

Splunk Inc. (NASDAQ:SPLK) is a leading American provider of cloud security solutions. At the close of the fourth quarter of 2022, 52 hedge funds were eager on Splunk Inc. (NASDAQ:SPLK) and held collective stakes worth $1.19 billion in the company. This is compared to 46 hedge funds in the previous quarter with stakes worth $828 million. The hedge fund sentiment for Splunk Inc. (NASDAQ:SPLK) is positive and the stock is one of the best cybersecurity stocks to buy now.

Wall Street is bullish on Splunk Inc. (NASDAQ:SPLK). On March 2, BMO Capital analyst Keith Bachman raised his price target on Splunk Inc. (NASDAQ:SPLK) to $113 from $100 and maintained an Outperform rating on the shares.

As of December 31, Whale Rock Capital Management is the largest investor in Splunk Inc. (NASDAQ:SPLK) and has a stake worth $217.3 million.

Vulcan Value Partners made the following comment about Splunk Inc. (NASDAQ:SPLK) in its Q4 2022 investor letter:

“We exited our position in Splunk Inc. (NASDAQ:SPLK) during the quarter. A number of developments caused us to question whether Splunk’s competitive position was eroding. Splunk is a premium product, and less expensive alternatives have made progress increasing the quality of their offerings. Our research has confirmed Splunk is losing market share to these players, including Microsoft’s Sentinel. Sentinel has made a number of improvements over time and integrates with Microsoft’s other products. Notably, both of Splunk’s Co-Presidents left Splunk in 2022 to work for Microsoft. Splunk’s Chief Financial Officer left a few months later. Before the CFO left, Splunk lowered its annual recurring revenue guidance for the year. While the company attributed the change to the macro environment, we were unable to differentiate to what extent the slowdown was caused by the macro environment versus competitive factors. Based on our primary research and competitive concerns, we no longer had sufficient confidence in Splunk’s value stability. Splunk no longer qualifies for investment, and we exited the position.”

4. Okta, Inc. (NASDAQ:OKTA)

Number of Hedge Fund Holders: 59

On March 1, Okta, Inc. (NASDAQ:OKTA) posted strong earnings for the fiscal fourth quarter of 2023. The company reported an EPS of $0.30 and beat EPS expectations by $0.21. The company generated a revenue of $510 million, up 33.15% year over year, and outperformed consensus by $20.55 million.

This March, WestPark Capital analyst Casey Ryan started coverage of Okta, Inc. (NASDAQ:OKTA) with a Buy rating and a $120 price target. The stock is placed fourth among the best cybersecurity stocks to buy now according to analysts and hedge funds.

At the end of the fourth quarter of 2022, 59 hedge funds were bullish on Okta, Inc. (NASDAQ:OKTA) and disclosed positions worth $1.26 billion in the company. This is compared to 47 positions in the preceding quarter with stakes worth $763.5 million. The hedge fund sentiment for the stock is positive.

As of December 31, Holocene Advisors is the leading shareholder in Okta, Inc. (NASDAQ:OKTA) and has a position worth $120 million.

3. Datadog, Inc. (NASDAQ:DDOG)

Number of Hedge Fund Holders: 63

Wall Street is bullish on Datadog, Inc. (NASDAQ:DDOG). On February 21, BofA analyst Koji Ikeda revised his price target on Datadog, Inc. (NASDAQ:DDOG) to $110 from $120 and maintained a Buy rating on the shares. The stock is one of the best cybersecurity stocks to buy now.

Datadog, Inc. (NASDAQ:DDOG) was spotted on 63 investors’ portfolios at the close of Q4 2022. These funds disclosed collective stakes worth $1.46 billion in the company. As of December 31, Durable Capital Partners is the most prominent shareholder in the company and has disclosed a position worth $205 million.

Here is what RiverPark Advisors had to say about Datadog, Inc. (NASDAQ:DDOG)  in its Q4 2022 investor letter:

“We initiated a small position in Datadog, Inc. (NASDAQ:DDOG) during the quarter. As businesses have transitioned to cloud software infrastructure, much of which is in isolated data silos, it has become increasingly difficult for data engineers to monitor and analyze system performance. Datadog provides a SaaS software platform to monitor and analyze the performance of software applications and IT infrastructure.

The company has quickly grown its revenue from $100 million in 2017 to $1 billion in 2021 and, we believe, should continue to grow revenue at more than 30% annually as it penetrates its $40 billion and fast-growing market. Less than 10% of software applications are currently monitored. Datadog’s customer count has been growing rapidly, up 27% year over year as of 3Q22. Additionally, the company’s dollar-based net retention rate has been 130%+ as existing customers continue to use an increasing number of products and the company continues to add new features. For 3Q22, 80% of customers used 2+ products, while 16% of customers used 6+ products (up from less than 1% two years ago). As an extremely capex light software business, DDOG already has significant FCF (and a 24% FCF margin), which should continue to grow more than 40% for 2022 to $355 million, up from $1 million two years ago.”

2. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge Fund Holders: 66

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was held by 66 hedge funds at the end of Q4 2022. These funds held positions worth $1.64 billion in the company. As of December 31, SCGE Management is the top shareholder in the company and has disclosed a stake worth $154 million.

On March 8, Deutsche Bank raised its price target on Crowdstrike Holdings, Inc. (NASDAQ:CRWD) to $130 from $115 and reiterated a Hold rating on the shares. Shares of Crowdstrike Holdings, Inc. (NASDAQ:CRWD) have surged by 29.03% since the beginning of 2023, as of March 22, and the stock is placed second on our list of the best cybersecurity stocks to buy now.

Alger Capital made the following comment about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q4 2022 investor letter:

“CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in the Endpoint Protection Platform (EPP) market, where EPP solutions help protect enterprises’ internet-connected devices from cyber-attacks. The company also benefits from a market shift from signature-based- on-premises solutions to cloud-based platforms using Al and machine learning. CrowdStrike’s platform is one of the few 100% cloud-based architectures and we believe it is well positioned to displace incumbents with its advanced detection and remediation capabilities. During the period, shares underperformed as the company reported quarterly results slightly below expectations, where annual-recurring-revenue (ARR) and Net New ARR (NNARR) came in below consensus. Moreover, management guided fiscal 2023 revenue slightly below estimates, and mentioned that small-to-medium sized business (SMB) customers are increasingly delaying purchasing decisions given the tougher operating environment, leading to longer sales cycles. They also noted that larger enterprise customers are reducing operating expenses as they navigate next year’s challenging environment. Management also addressed that signing a number of contracts with multiphase subscription start dates would result in pushing ARR recognition out into future quarters and expects this trend to persist in near term.”

1. Palo Alto Networks, Inc. (NYSE:PANW)

Number of Hedge Fund Holders: 85

Palo Alto Networks, Inc. (NYSE:PANW) has gained 37.88% year to date, as of March 22. This February, RBC Capital analyst Matthew Hedberg raised his price target on Palo Alto Networks, Inc. (NYSE:PANW) to $216 from $200 and maintained an Outperform rating on the shares.

On February 21, Palo Alto Networks, Inc. (NYSE:PANW) announced market-beating earnings for the second quarter of fiscal 2023. The company reported an EPS of $1.05 and outperformed EPS estimates by $0.27. Palo Alto Networks, Inc. (NYSE:PANW) generated a revenue of $1.66 billion for the quarter, up 25.68% year over year and ahead of Wall Street consensus by $5.58 million.

At the end of Q4 2022, 85 hedge funds were long Palo Alto Networks, Inc. (NYSE:PANW) and disclosed positions worth $3.27 billion in the company. Of those, Citadel Investment Group was the leading investor in the company and held a stake worth $363.7 million. Palo Alto Networks, Inc. (NYSE:PANW) is the best cybersecurity stock to buy now according to analysts and hedge funds.

Here is what ClearBridge Investments had to say about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q4 2022 investor letter:

“Stock selection within the IT sector was the main detractor from relative performance during the period. In addition to rate hikes compressing the multiples of longerduration, high growth companies, recession concerns were also a headwind. IT companies which had proven resilient against customer budget reductions earlier in the year are starting to feel the impact of spending slowdowns as companies further scrutinize expenses in light of economic uncertainty. For example, Palo Alto Networks, Inc. (NASDAQ:PANW), which provides enterprise security solutions including next-generation firewalls and threat detection software, faced a challenging environment as customers delayed purchases and orders. However, we remain convinced of the company’s long-term growth prospects as an industry leader in a critical field and as digital attacks and ransomware continue to grow.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a look at 16 Best Strong Buy Stocks To Invest In and 13 Best Consumer Discretionary Stocks To Buy.