We recently compiled a list of the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Check Point Software Technologies Ltd. (NASDAQ:CHKP) stands against the other undervalued cybersecurity stocks.
With businesses facing a significantly complex cyber threat landscape, it is of utmost importance to stay ahead of trends in cybersecurity. Industry experts believe that, in 2025, the integration of AI in threat detection and acceleration in post-quantum encryption should define the landscape of the broader cybersecurity industry. Splashtop reported that the transition to a Zero-Trust framework demonstrates a significant shift in cybersecurity, emphasizing continuous verification and minimal access to enhance overall network security.
Global X Cybersecurity ETF saw an increase of more than 20% over the past year. What has led to this rally? Given the recent adoption of AI technology, market experts believe that the need for cybersecurity is significantly important. With several companies integrating GenAI into their operations, there has been a significant increase in cyberattacks. This led to increased demand for product offerings of cybersecurity companies.
Cybersecurity Industry- The Road Ahead
As per Fortune Business Insights, the global cybersecurity market size was pegged at US$172.24 billion in 2023. This market should grow from USD 193.73 billion in 2024 to USD 562.72 billion by 2032, demonstrating a CAGR of 14.3%. Furthermore, the US cyber security market should see strong growth, touching an estimated value of US$166.73 billion in 2032. This should stem from an increased number of e-commerce platforms. The strong adoption of enterprise security solutions in manufacturing, BFSI, and healthcare should fuel market growth up to 2032.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Prevention of Cyberattacks
As per EIN Presswire, the quicker expansion of the Internet of Things (IoT) offers a significant opportunity for the broader cybersecurity market. As IoT devices—which range from smart home appliances to industrial sensors— become critical to business operations, there seems to be an increased requirement for effective cybersecurity measures. Several devices often lack strong security protocols. This leads to hacking, unauthorized access, and exploitation.
EIN Presswire added that, amidst these challenges, the cybersecurity industry has a unique opportunity to develop specialized solutions established to secure the IoT ecosystem effectively. This might consist of implementing advanced encryption protocols to protect data transmission, and developing device authentication mechanisms so that only authorized devices can connect to the network. Also, intrusion detection systems can be deployed tailored to monitor and protect against threats related to interconnected devices.
NGFWs (Next Generation Firewalls) protect against evolving practices that use AI to bypass traditional defences, as per Juniper Research. It added that the network layer is the most critical element of IoT networks to protect, with more than 45% of global cybersecurity spending inclined towards protecting the network layer in 2025.
Our Methodology
To list the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds, we sifted through numerous online rankings and combed through cybersecurity-focused ETFs, such as First Trust NASDAQ Cybersecurity ETF and Amplify Cybersecurity ETF. After getting an initial list of 25-30 stocks, we extracted the ones trading lower than the forward P/E of ~20.0x, as of November 20. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An engineer typing on a computer, developing the latest cybersecurity application.
Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Forward P/E as of November 20: ~17.6x
Number of Hedge Fund Holders: 32
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is engaged in developing, designing, and marketing enterprise software. It provides threat prevention, web security, security management, and software-defined protection, among other services.
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is cautiously optimistic about its growth trajectory, with an emphasis on network security, email security, and SASE solutions. Given its strong focus on product innovation and strategic acquisitions, Check Point Software Technologies Ltd. (NASDAQ:CHKP) appears to be well-placed to meet higher demand for cybersecurity solutions and maintain its growth momentum into the next fiscal year.
Experts believe that The Infinity platform offers a significant opportunity for Check Point Software Technologies Ltd. (NASDAQ:CHKP) to fuel growth and strengthen its market position. As a comprehensive security solution, Infinity addresses the increased demand for integrated, cloud-based security offerings that can protect organizations against multiple attack vectors. With more and more organizations embracing digital transformation, the demand for comprehensive security solutions, like Infinity, should grow.
The Infinity platform’s subscription-based model is expected to help Check Point Software Technologies Ltd. (NASDAQ:CHKP) pivot towards more predictable and recurring revenue streams. This can improve the company’s financial stability. When customers become deeply integrated with the Infinity ecosystem, there may be increased switching costs, which can improve customer retention.
Ariel Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Israeli based provider of products for information technology security, Check Point Software Technologies Ltd. (NASDAQ:CHKP) also advanced following solid quarterly earnings results. Double-digit billings growth was particularly strong across geographies. Consumers appear to be adopting more pillars of Check Point’s platform and engaging in larger strategic commitments with Infinity and Quantum Force. The company also announced the appointment of new CEO Nadav Zafrir, whose reputation is well established in the cyber community. Meanwhile, Check Point continues to be an astute steward of capital, pursuing organic growth and utilizing surplus cash to return capital to shareholders. We continue to favor the company’s exposure to the fast-growing cloud security market and its industry leading profitability.”
Overall CHKP ranks 2nd on our list of the most undervalued cybersecurity stocks to buy according to hedge funds. While we acknowledge the potential of CHKP 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 CHKP 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.
Disclosure: None. This article is originally published at Insider Monkey.
