We recently published a list of 10 Best Performing Cybersecurity Stocks in 2024. In this article, we are going to take a look at where Leidos Holdings, Inc. (NYSE:LDOS) stands against other best performing cybersecurity stocks in 2024.
Data Breaches to Disruptions
The technology sector has expanded rapidly in recent years, creating an increasingly interconnected digital world. Cybersecurity, a relatively new field, has become critical as the volume of sensitive data stored online has surged. This growth has unfortunately provided more opportunities for cybercriminals to commit financial theft, steal confidential information, and disrupt vital infrastructure. In 2023 alone, data breaches affected over 349 million individuals, highlighting a troubling trend. The Consumer Sentinel Network received a surge in reports, with fraud making up over 2.6 million cases and identity theft surpassing one million. The scale of these threats is substantial; according to McKinsey, damages from cyberattacks could reach approximately $10.5 trillion annually by 2025—a 300% increase from 2015 levels.
A Microsoft Security survey reveals that small and mid-sized businesses (SMBs) face added challenges due to limited resources and expertise in implementing and managing advanced security solutions to detect, prevent, or mitigate cyberattacks. Fewer than one-third of respondents indicated that their SMBs handle security internally; the majority rely on consultants, managed service providers, or cyber insurance guidelines for choosing security tools.
AI Meets Cybercrime
As AI technology advances, data privacy and risk management concerns are escalating for individuals and businesses alike. Although regulators are exploring strategies to foster AI innovation while minimizing potential negative impacts on society, the United States still lacks comprehensive federal legislation addressing AI.
AI is transforming the cybersecurity landscape from both the threat and defense perspectives, creating a long-term growth path. “Cyber threats continue to evolve, and as digital transformation accelerates, so does the potential for cyberattacks,” noted Christopher Gilchrist, principal analyst at Forrester. Earlier this year, The World Economic Forum predicted that AI could push cyber incidents and data breaches to hit record levels in 2024, following a 72% year-over-year rise in breaches in the past year.
Nonetheless, the technology holds transformative potential for security. Palo Alto Networks remarked that 2024 “will be a phenomenal year in the utilization of AI in cybersecurity,” yet predicts even greater advances in the future. For investors, this growth represents an intriguing opportunity. According to Acumen research, the global market for AI-driven cybersecurity products was valued at around $15 billion in 2021, with projections to reach approximately $135 billion by 2030. AI’s ability to analyze vast data sets and detect patterns makes it especially effective for tasks like penetration testing, where systems are deliberately probed for vulnerabilities. By deploying AI tools to assess their own technology, organizations can identify weaknesses proactively—closing gaps before hackers have the chance to exploit them.
The constant evolution of external threats means that cybersecurity must continually adapt to stay ahead of emerging risks, with the top players racing to deliver innovative solutions to remain competitive.
A close-up of an engineer working on the development of a new air navigation system.
Our Methodology
To compile our list of the best-performing cybersecurity stocks this year, we reviewed the holdings of various cybersecurity ETFs and sorted them by year-to-date performance, as of November 8, in ascending order. Additionally, we included hedge fund sentiment on each stock to provide further context and insight into each company’s outlook.
Why do we care about what hedge funds do? 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).
Leidos Holdings, Inc. (NYSE:LDOS)
Year-to-Date Performance as of November 8: 83.72%
Number of Hedge Fund Holders: 38
Leidos Holdings, Inc. (NYSE:LDOS), headquartered in Reston, Virginia, is a U.S.-based leader in defense, aviation, IT, and biomedical research. The company provides comprehensive cybersecurity solutions spanning offensive, defensive, and cyber-physical systems, with expertise in areas such as zero trust and quantum cryptography. A major partner to the U.S. government, particularly the Department of Defense and Department of Homeland Security, Leidos Holdings, Inc. (NYSE:LDOS) also offers PACKIT™ (Proven, Analytic-Centric Kill Chain Implementation and Transformation) solutions, which help businesses strengthen their cybersecurity posture.
In Q3 2024, Leidos Holdings, Inc. (NYSE:LDOS) reported strong financial performance, achieving its sixth consecutive quarter of growth. Highlights include a record adjusted EBITDA margin of 14.2% and a 44% increase in adjusted diluted EPS, while quarterly revenue reached $4.19 billion, marking a 7% year-over-year increase. Additionally, the company raised its 2024 revenue guidance to between $16.35 billion and $16.45 billion, with adjusted EBITDA guidance in the high 12% range.
On November 5, JPMorgan raised its price target for Leidos Holdings, Inc. (NYSE:LDOS) to $205 from $185, maintaining an Overweight rating. This adjustment reflects Leidos’ strong performance in the Federal IT Services sector and its success in mitigating financial risks, especially within its Health & Civil division, where it excelled in the VA medical exams re-compete.
Overall, LDOS ranks 1st on our list of best performing cybersecurity stocks in 2024. While we acknowledge the potential of LDOS, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LDOS 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.
