We recently compiled a list of the The 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds.In this article, we are going to look at where Check Point Software Technologies Ltd. (NASDAQ:CHKP) versus the other undervalued cybersecurity stocks.
As businesses face a significantly complex cyber threat landscape, it is paramount to stay ahead of cybersecurity trends. Industry experts believe that the integration of AI into threat detection and the acceleration of post-quantum encryption should shape the landscape of the broader cybersecurity industry by 2025. Splashtop reported that the transition to a Zero-Trust framework shows a significant shift in cybersecurity, emphasizing continuous authentication and minimal access to improve overall network security.
Global What led to this rally? Given the recent adoption of AI technology, market experts believe that the need for cybersecurity is paramount. As several companies integrate GenAI into their operations, there has been a significant increase in cyber-attacks. This led to increased demand for product offerings from cybersecurity companies.
According to Fortune Business Insights, the size of the global cybersecurity market was estimated at $172.24 billion by 2023. This market should grow from $193.73 billion in 2024 to $562.72 billion in 2032, demonstrating a CAGR of 14.3%. Furthermore, the US cybersecurity market should see strong growth, with an estimated value of $166.73 billion by 2032. This would come from an increased number of e-commerce platforms. Strong adoption of enterprise security solutions in manufacturing, BFSI and healthcare should drive market growth through 2032.
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According to EIN Presswire, the accelerated expansion of the Internet of Things (IoT) offers significant opportunities for the broader cybersecurity market. As IoT devices – ranging from smart home appliances to industrial sensors – become critical to business operations, there appears to be an increasing need for effective cybersecurity measures. Various devices often lack strong security protocols. This leads to hacking, unauthorized access and exploitation.
EIN Presswire added that amid these challenges, the cybersecurity industry has a unique opportunity to develop specialized solutions designed to effectively secure the IoT ecosystem. This may include implementing advanced encryption protocols to protect data transmissions, and developing device authentication mechanisms so that only authorized devices can connect to the network. Custom intrusion detection systems can also be deployed to monitor and protect against threats associated with interconnected devices.
NGFWs (Next Generation Firewalls) protect against evolving practices that use AI to bypass traditional defenses, according to 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 focused on protecting the network layer by 2025.
Our Methodology
To name the 12 most undervalued cybersecurity stocks to buy according to hedge funds, we scoured numerous online rankings and scoured cybersecurity-focused ETFs like First Trust NASDAQ Cybersecurity ETF and Amplify Cybersecurity ETF. After getting an initial list of 25 to 30 stocks, we weeded out the stocks that were trading below the forward price-to-earnings ratio of ~20.0x on November 20. Finally, the stocks were ranked in ascending order of their hedge fund sentiment, as of Nov. 20. Q3 2024.
At Insider Monkey, we’re obsessed with the stocks hedge funds are piling into. The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see more details here).
Okta, Inc. (NASDAQ:OKTA) Expands AI Features in Cybersecurity Solutions; CEO reflects on the future of digital identity management
An engineer typing on a computer developing the latest cybersecurity application.
Forward price-to-earnings ratio as of November 20: ~17.6x
Number of hedge fund holders: 32
Check Point Software Technologies Ltd. (NASDAQ:CHKP) develops, designs and markets business software. It offers threat prevention, web security, security management, and software-defined protection, among others.
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is cautiously optimistic about its growth trajectory, with a focus on network security, email security and SASE solutions. Given the strong focus on product innovation and strategic acquisitions, Check Point Software Technologies Ltd. (NASDAQ:CHKP) is well positioned to meet higher demand for cybersecurity solutions and maintain growth momentum into the next fiscal year.
Experts believe that the Infinity platform represents a significant opportunity for Check Point Software Technologies Ltd. (NASDAQ:CHKP) to drive growth and strengthen its market position. As a comprehensive security solution, Infinity meets the increased demand for integrated, cloud-based security offerings that can protect organizations against multiple attack vectors. As more organizations embrace digital transformation, demand for comprehensive security solutions like Infinity should grow.
The Infinity platform’s subscription-based model is expected to support Check Point Software Technologies Ltd. (NASDAQ:CHKP) move toward more predictable and recurring revenue streams. This can improve the financial stability of the company. As customers become deeply integrated into the Infinity ecosystem, higher switching costs may arise, which can improve customer retention.
Ariel Investmentsan investment management company, has released its investor letter for the third quarter of 2024. This is what the fund said:
“Israeli supplier of information technology security products, Check Point Software Technologies Ltd. (NASDAQ:CHKP) also advanced after solid quarterly earnings results. Double-digit billing growth was particularly strong across all geographies. It appears that consumers are adopting more pillars of the Check Point platform and making greater strategic commitments to 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 remains an astute capital manager, pursuing organic growth and using excess cash to return capital to shareholders. We remain supportive of the company’s exposure to the fast-growing cloud security market and its industry-leading profitability.”
In short, CHKP is in 2nd place on our list of the most undervalued cybersecurity stocks to buy according to hedge funds. While we recognize CHKP’s potential as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns in a shorter time frame. If you’re looking for a deeply undervalued AI stock that shows more promise than CHKP but trades at less than five times earnings, check out our report on the cheapest AI stocks.
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Disclosure: None. This article was originally published on Insider Monkey.
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