In this article, we will look at the 10 best cybersecurity stocks to invest in under $20.

The cybersecurity sector is at a tipping point, driven by growing cyber threats, breakthrough technologies such as AI and IoT, and a renewed focus on national security and digital infrastructure. Despite a well-documented talent scarcity and evolving geopolitical concerns, the industry continues to grow rapidly, creating an ideal environment for innovation and investment.

According to Fortune Business Insights, the worldwide cybersecurity industry was valued at $172.24 billion in 2023 and is expected to reach $562.72 billion by 2032, expanding at a CAGR of 14.3%. North America, notably the United States, dominates this environment, driven by the growth of e-commerce platforms, increased digital adoption in industries such as BFSI and healthcare, and greater consumer awareness. Cloud computing, AI, machine learning, and IoT technologies are now at the forefront of current cybersecurity solutions, allowing enterprises to identify and prevent digital breaches in real time.

However, as technology advances, so do the hazards. McKinsey’s November 2024 report underlines the critical need to make AI systems more secure, advising cybersecurity providers to focus on the dual problem of protecting both their own AI models and those used by their clients. Generative AI and third-party integrations provide new attack surfaces, necessitating the use of smarter, more adaptive protection technologies.

The need is further heightened by significant policy developments. According to WIRED, former President Trump slapped punitive tariffs on technology imports, sending shockwaves across the semiconductor and e-commerce sectors. While some tech businesses may profit from increased demand for logistics and supply chain management technologies, others, such as major tech giants, saw their stock prices fall sharply due to concerns about inflation and disrupted trade routes. Tariffs on goods from China and other significant nations may boost consumer prices and limit the supply of critical cybersecurity components, particularly for cloud and data center operators.

In the meantime, firms’ stakes are still rising. Nearly half of American businesses have experienced significant revenue losses as a result of data breaches, according to Arcserve and IBM. In 2024, the average cost of a breach was close to $4.9 million; when events took more than 200 days to identify, the cost increased to $5.5 million. The threat surface is growing due to generative AI, and just 40% of SaaS services are actively monitored for security, further taxing already overworked security teams.

According to Forbes, there is a paradox in the workforce, despite a 4.8 million cybersecurity expert deficit worldwide, thousands of competent IT workers are still underutilized as a result of strict recruiting practices and a lack of investment in local talent development. While degrees and certifications are still important, practical experience gained through laboratories, bug bounty programs, or internships has emerged as the key differentiator.

When combined, these patterns point to a fundamental transformation of the cybersecurity sector as well as an increase in demand for cybersecurity services. Cybersecurity firms that can innovate at scale while navigating governmental changes and global uncertainties are being keenly watched by investors, particularly those keeping an eye on high-growth tech industries. In light of this, we now concentrate on the 10 Best Cybersecurity Stocks to Invest in Under $20.

Methodology

In order to find the Best Cybersecurity Stocks to invest in under $20, we started by searching for companies working in the cybersecurity sector using the Finviz stock screener, applying a price filter to include just those trading below $20 per share. Following the compilation of the list, we used Insider Monkey’s hedge fund holdings database to analyze hedge fund sentiment for each stock. Next, we arranged the stocks according to the number of hedge funds that owned each one in ascending order, as per Insider Monkey’s database of Q4 2024. The final list consists of cybersecurity stocks under $20 that are currently overlooked by institutional investors, perhaps representing discounted chances in a quickly changing field.

Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10. Telos Corporation (NASDAQ:TLS)

Share Price: $2.680

Number of Hedge Fund Holders: 8

Telos Corporation (NASDAQ:TLS) provides cloud, enterprise, and cybersecurity solutions to both commercial and governmental customers globally. Security Solutions and Secure Networks are the company’s two primary business categories. Its flagship solutions are IDTrust360 for trusted identity services and Xacta for cyber risk management.

Telos Corporation (NASDAQ:TLS) reported revenue of $26.4 million for the fourth quarter ended December 31, 2024. This revenue was close to the top of its guidance range and represented an 11% sequential growth. Security Solutions accounted for 83% of total sales with a 20% sequential growth in revenue. The cash gross margin hit a record 47%, its highest level since the company’s 2020 IPO, while the GAAP gross margin increased by almost 600 basis points year-over-year to 40.3%. The company also predicted positive cash flow for the first quarter of 2025 and drastically cut its adjusted EBITDA deficit to just $200,000.

A $5.8 million contract award to support the Department of Defense’s Microwave Line of Sight (MLoS) program was announced by Telos Corporation (NASDAQ:TLS) on April 10, 2025. This enhances Telos’ standing in providing warfighters with a secure and adaptable communications infrastructure. Additionally, Telos Corporation (NASDAQ:TLS) gained access to a government market opportunity valued at about $35 billion on January 29, 2025, when it was awarded prime contractor status for the U.S. Navy’s SeaPort Next Generation (SeaPort NxG) contract.

Telos Corporation (NASDAQ:TLS) stands out as one of the best cybersecurity companies under $20 heading into 2025, thanks to a rising backlog of federal contracts, improving margins, and the ramping up of significant programs like TSA PreCheck and DMDC.

9. Arqit Quantum Inc. (NASDAQ:ARQQ)

Share Price: $15.15

Number of Hedge Fund Holders: 8

London-based cybersecurity company, Arqit Quantum Inc. (NASDAQ:ARQQ) specializes in quantum-safe encryption using its QuantumCloud platform, which generates unbreakable encryption keys. The company helps businesses future-proof their data from quantum risks by offering maintenance, support, and expert services for its solutions. With its stock increasing 186.5% over the last six months, Arqit Quantum Inc. has attracted a lot of attention and demonstrated growing investor trust.

Throughout fiscal 2024, Arqit Quantum Inc. (NASDAQ:ARQQ) made significant progress in enhancing client interaction in the government and telecom industries. By collaborating with eight significant telecom companies and forming a historic alliance with Sparkle to deliver Quantum-Safe network services in 33 countries, it accomplished significant milestones. Arqit started generating revenue under a multi-year, seven-figure contract that it had negotiated with a Middle Eastern government agency. The company signed 13 contracts this year, up from seven in 2023, and increased its government clientele.

Arqit’s fiscal 2024 revenue was $293,000, compared to $640,000 in 2023, as a result of a strategic change from perpetual licenses to operational recurring licenses. Disciplined cost control measures resulted in a significant reduction of administrative expenses to $23.5 million. With $18.7 million in cash at the conclusion of the fiscal year on September 30, 2024, the company ensured stability to support continued growth plans.

On April 16, 2025, Arqit Quantum Inc. (NASDAQ:ARQQ) further strengthened its executive team by appointing cybersecurity expert Jonathan Nguyen-Duy as Chief Technology Officer. As Arqit expands its quantum-safe encryption products, his extensive experience at Intel, Fortinet, and Verizon is anticipated to spur innovation. For investors interested in next-generation data security, Arqit Quantum Inc. (NASDAQ:ARQQ) stands out as one of the best cybersecurity stocks under $20 due to its solid strategic positioning and increased awareness of quantum hazards.