In this article, we discuss 13 best cybersecurity stocks to buy now.
Gartner expects end-user spending for the information security and risk management market to increase from $172.5 billion in 2022 to $267.3 billion in 2026, representing a compound annual growth rate of 11%. Cybersecurity tech stacks will bridge the gap left by manual checks in machine endpoints, cloud infrastructure, hybrid clouds, and software supply chains, which bolsters safety and leaves data less vulnerable to breaches. A VentureBeat report suggests that 69% of organizations expect higher cyber-safety spending in 2022, up from 55% last year. AI adoption and sales of cybersecurity firms are forecasted to grow from $10.5 billion in 2020 to $46.3 billion in 2026, indicating a CAGR of 28% during the forecast period.
The Biden administration has advised states and local governments to sign up for cybersecurity grants valued at $1 billion over four years. This move highlights the efforts of the US government to protect data and privacy of citizens from criminal hackers, who regularly target schools, hospitals, enterprises, gas pipelines, and everything in between. Secretary of Homeland Security, Alejandro Mayorkas, noted that hackers are taking advantage of the “limited capacity” of local governments.
Chris DeRusha, Federal Chief Information Security Officer and Deputy National Cyber Director, said in a recent blog post that cybersecurity firms need to upgrade their efforts so that their software works as advertised. He further explained:
“With the cyber threats facing Federal agencies, our technology must be developed in a way that makes it resilient and secure, ensuring the delivery of critical services to the American people while protecting the data of the American public and guarding against foreign adversaries.”
The rules now in place by governments put a “pretty significant compliance burden” on cybersecurity vendors, according to Julie Dunne, former commissioner of the US General Services Administration’s federal acquisition service. As cybersecurity remains a top priority for firms and the government alike, the sector is set to experience capital gains and heightened growth. Some of the best cybersecurity stocks to buy include Fortinet, Inc. (NASDAQ:FTNT), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), and Palo Alto Networks, Inc. (NASDAQ:PANW).
Photo by Kaur Kristjan on Unsplash
Our Methodology
We selected the following cybersecurity stocks based on optimistic analyst ratings, strong hedge fund sentiment, and future growth potential. We have arranged the list according to the hedge fund sentiment around the securities, which was assessed from Insider Monkey’s Q2 2022 database of about 900 elite hedge funds.
Best Cybersecurity Stocks to Buy Now
13. CACI International Inc (NYSE:CACI)
Number of Hedge Fund Holders: 22
CACI International Inc (NYSE:CACI) is a Virginia-based company that provides expertise and technology to support national security missions and drive government modernization in the intelligence, defense, and federal civilian sectors. On August 30, CACI International Inc was awarded a $5.71 billion blanket purchase agreement for Enterprise Information Technology as a Service Wave 1. The contract was issued by the US Department of Defense.
On August 31, William Blair analyst Louie DiPalma maintained an Outperform rating on CACI International Inc after the company outbid three other firms for the $5.7 billion, 10-year enterprise information technology as a service Wave 1 contract. It has the potential to be CACI International Inc’s largest contract by revenue, the analyst told investors in a research note. He estimated that the Wave 1 contract will contribute $200 million in revenue for fiscal 2024 and $350 million in revenue for fiscal 2025. The analyst also expects upside over the next year in CACI International Inc shares.
According to Insider Monkey’s data, 22 hedge funds were bullish on CACI International Inc at the end of Q2 2022, compared to 25 funds in the last quarter. Murray Stahl’s Horizon Asset Management is the leading position holder in the company, with 466,651 shares worth $131.5 million.
Like Fortinet, Inc., CrowdStrike Holdings, Inc., and Palo Alto Networks, Inc., CACI International Inc is one of the best cybersecurity stocks to buy now.
12. Qualys, Inc. (NASDAQ:QLYS)
Number of Hedge Fund Holders: 23
Qualys, Inc. (NASDAQ:QLYS) is a California-based company that specializes in cloud-based information technology, security, and compliance solutions. Its areas of expertise include Vulnerability Management, Detection and Response, Threat Protection, Patch Management, SaaS Detection and Response, Secure Enterprise Mobility, Web Application Scanning, Web Application Firewall, Global Asset Inventory; Cybersecurity Asset Management, and Container Security. Qualys, Inc. is one of the top cybersecurity stocks to watch.
Qualys, Inc. exceeded top and bottom line on EPS and revenue in the second quarter of 2022 and raised full-year guidance. The full-year 2022 revenue guidance was lifted to $488 million-$489.5 million, versus a consensus $485.18 million. The GAAP EPS guidance was raised to $2.39-$2.44 and the non-GAAP EPS guidance to $3.50-$3.55.
On August 9, DA Davidson analyst Rudy Kessinger raised the price target on Qualys, Inc. to $135 from $120 and kept a Neutral rating on the shares. The analyst cited the company’s “surprisingly strong” beat and raise in Q2 as the management said that sales were not significantly impacted by the macro environment.
According to Insider Monkey’s Q2 data, Qualys, Inc. was part of 23 hedge fund portfolios, with collective stakes worth about $300 million. Terry Smith’s Fundsmith LLP is the leading stakeholder of the company, with 930,206 shares worth $117.3 million.
Here is what Headwaters Capital specifically said about Qualys, Inc. in its Q2 2022 investor letter:
“Qualys, Inc. was founded in 1999 and provides vulnerability management software to both SMBs and enterprise customers. Vulnerability management software provides a continuous view of security and compliance across all of a company’s assets including on-premise, end-points, cloud and mobile. The easiest way to think about QLYS’s original VM solution is that it provided a dashboard that monitored all potential threats to a network and helped IT departments prioritize which vulnerabilities were the highest risk. QLYS was a pioneer in the industry as they were one of the first companies to offer a cloud-based software as a service (SaaS) solution as opposed to the traditional license offerings that proliferated at the time. While QLYS’ VM software has always provided an industry leading dashboard to monitor weaknesses, it provided limited functionality to respond to these vulnerabilities. More recently, QLYS has increased the functionality of its software through the rollout of Detection and Response capabilities (VMDR) and extended detection and response (XDR) capabilities in late 2021.
The cybersecurity space has been marked by a preference of customers for point solution expertise as opposed to a winner take all solution. This market structure is driven by the complex nature of assets that need protection, the dynamic nature of security threats and the critical nature of cybersecurity, which leads to a customer preference for quality over cost. Historically, cybersecurity was best served by firewalls, which provided a ring fence around assets that were physically located on a network. Firewalls are increasingly becoming obsolete in the cybersecurity world as the network perimeter has effectively disappeared due to the growing adoption of SaaS solutions and new connected devices that connect to the network from multiple new endpoints. This trend has only accelerated following COVID. As more devices and software tools connect from outside of the traditional firewall perimeter, the importance of security monitoring tools such as VM, VMDR and XDR has increased. In many ways, vulnerability management is the foundation of cybersecurity as it provides the dashboard for monitoring all potential security gaps. QLYS’ software can provide critical data about which assets are exposed to specific threats and can increasingly help IT departments prioritize and remediate these vulnerabilities.
Understanding QLYS’s history is important to gaining confidence in QLYS’ ability to maintain revenue growth going forward. QLYS was almost perfectly positioned earlier this decade to take advantage of both the transition in the software market from license to SaaS solutions as well as the cybersecurity trend away from firewalls as devices increasingly moved beyond a physical perimeter. Given the large TAM, industry tailwinds and a market leading product, QLYS was able to grow revenues at a +20% CAGR from 2012-2018. Even more impressive, QLYS was able to accomplish this growth with limited investment in R&D or its sales force. R&D as a percentage of revenues declined from 22% in 2012 to 16% in 2018 while S&M declined from 40% in 2012 to 22% in 2018. Consequently, QLYS operates with one of the highest EBITDA margins in the industry at 45%. The ability for QLYS to post such consistent revenue growth despite under-investing in product development and sales is evidence of the strong competitive positioning of QLYS’ software and the critical nature of the product…” (Click here to read more)
11. SentinelOne, Inc. (NYSE:S)
Number of Hedge Fund Holders: 26
SentinelOne, Inc. (NYSE:S) is a California-based cybersecurity provider that offers endpoint protection platform, endpoint detection and response, cloud workload protection platform, and IoT security in a centralized platform. The company beat Q2 estimates and raised FY 2022 revenue growth guidance to 103% from 98%. SentinelOne, Inc. is one of the top cybersecurity players in the market.
On September 6, Deutsche Bank analyst Brad Zelnick raised the price target on SentinelOne, Inc. to $32 from $30 and reiterated a Buy rating on the shares. The company reported “strong” Q2 results, with net new annual recurring revenue up to $100 million, representing the biggest incremental add on record, the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey, Dan Loeb’s Third Point is the leading position holder in SentinelOne, Inc., with 21 million shares worth about $492 million. Overall, 26 hedge funds were long SentinelOne, Inc. at the end of June 2022, compared to 38 funds in the earlier quarter.
Here is what ClearBridge Investments SMID Cap Growth Strategy has to say about SentinelOne, Inc. in its Q4 2021 investor letter:
“We added six new positions in the fourth quarter. We see next-generation cybersecurity provider SentinelOne, although early in its growth lifecycle, as capable of taking share from legacy players in the antivirus and broader cybersecurity industry.”
10. CyberArk Software Ltd. (NASDAQ:CYBR)
Number of Hedge Fund Holders: 29
CyberArk Software Ltd. (NASDAQ:CYBR) is an Israel-based company that provides software-based security solutions and services in the United States, Europe, the Middle East, Africa, and internationally. Its solutions include Privileged Access Manager, Vendor Privileged Access Manager, Endpoint Privilege Manager, Cloud Entitlements Manager, Identity and Access Management as a Service, and Secrets Manager Credential Provider. In Q3 2022, CyberArk Software Ltd. expects total revenue to be in the range of $147 million-$153 million, versus a consensus of $148.77 million.
On September 30, Canaccord analyst T. Michael Walkley initiated coverage of CyberArk Software Ltd. with a Buy rating and a $187 price target. CyberArk Software Ltd. is the “clear leader” in the Privileged Access Management space and a long-term winner in the software security market, the analyst told investors.
According to the second quarter database of Insider Monkey, 29 hedge funds held stakes worth $569.3 million in CyberArk Software Ltd., compared to 27 in the prior quarter worth $698.5 million. Robert G. Moses’ RGM Capital is the largest stakeholder of the company, with 1.11 million shares worth over $142 million.
Here is what Harding Loevner Global Small Companies Equity Fund has to say about CyberArk Software Ltd. in its Q3 2021 investor letter:
“By sector, stock selection in Information Technology (IT) and Health Care led performance, while our Industrials holdings lagged. In IT, security company Cyberark reported accelerating revenue growth for its subscription software, a sign that the company’s decision to transition away from a traditional software licensing business model was wise.”
9. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Number of Hedge Fund Holders: 34
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is an Israeli firm that develops, markets, and supports a range of products and services for IT security worldwide. The company specializes in network security, endpoint security, data security, and management solutions. The company recently outperformed both top and bottom line financial estimates for the second quarter of 2022. Check Point Software Technologies Ltd. is one of the best cybersecurity stocks to buy now.
On August 2, BMO Capital analyst Keith Bachman maintained an Outperform rating on Check Point Software Technologies Ltd. but lowered the price target on the shares to $150 from $155. The second quarter was “reasonable”, although the billings were less than expected, the analyst told investors. However, the analyst believes a more significant re-rating of the stock can occur with billings growth improving to the double-digit range, though this might not happen until 2023.
According to Insider Monkey’s Q2 data, 34 hedge funds were bullish on Check Point Software Technologies Ltd., with combined stakes worth $1.12 billion. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest stakeholder of the company, with 1.2 million shares valued at $152 million.
Here is what Diamond Hill International Fund Concentrated Fund has to say about Check Point Software Technologies Ltd. in its Q1 2022 investor letter:
“Check Point reported a solid Q4 as the company continues its lengthy transition towards a subscription-based sales model. We expect the firm to consistently repurchase shares with the substantial free cash flow it generates each year.”
8. Tenable Holdings, Inc. (NASDAQ:TENB)
Number of Hedge Fund Holders: 36
Tenable Holdings, Inc. (NASDAQ:TENB) is a Maryland-based company that offers cyber exposure solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. Tenable Holdings, Inc. has a huge runway for growth, with a total addressable market valued at $25 billion. It is one of the best cybersecurity stocks to monitor.
On July 27, DA Davidson analyst Rudy Kessinger reaffirmed a Buy rating on Tenable Holdings, Inc. but lowered the price target on the shares to $53 from $75. The company’s Q2 revenues were softer than last quarters amid a weakening macro environment, the analyst told investors. However, the analyst contended that security remains a top priority for organizations and it is categorized as a defensible expense in IT budgets, which should allow Tenable Holdings, Inc. to ride out the macro environment better than most.
Among the hedge funds tracked by Insider Monkey, 36 funds were long Tenable Holdings, Inc. at the end of Q2 2022, compared to 35 funds in the prior quarter. Bruce Emery’s Greenvale Capital is a prominent stakeholder of the company, with 2.50 million shares worth $113.5 million.
7. Zscaler, Inc. (NASDAQ:ZS)
Number of Hedge Fund Holders: 40
Zscaler, Inc. (NASDAQ:ZS) operates as a cloud security company worldwide. On September 29, the company announced that it has concluded the acquisition of ShiftRight, a closed loop security workflow automation provider. ShiftRight’s workflow automation technology will be integrated into the Zscaler Zero Trust Exchange cloud security platform to lower incident resolution time and improve overall automated security management. Zscaler, Inc. is one of the top cybersecurity stocks to buy now.
On September 16, MKM Partners analyst Catharine Trebnick assumed coverage of Zscaler, Inc. with a Buy rating and a $225 price target as part of a broader research note on the Cyber Security Software Sector. The company “came out of nowhere” to be the VPN replacement, providing SaaS first mover advantage to the Zero Trust framework, the analyst told investors. The analyst noted that Zscaler, Inc. has sustained top-line growth of more than 55% for the last two years and outperformed consensus estimates by an average of 7% over the period.
According to Insider Monkey’s data, 40 hedge funds were long Zscaler, Inc. at the end of June 2022, up from 39 funds in the last quarter. D E Shaw is one of the leading stakeholders in the company, with 1.4 million shares worth $208.7 million.
Here is what Artisan Small Cap Fund has to say about Zscaler, Inc. in their Q4 2020 investor letter:
“We also exited our investment in Zscaler. Zscaler provides cloud-based Internet security solutions. Cyber Security remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. Furthermore, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a remote workforce make operating IT infrastructures increasingly complex. Zscaler’s scalable, cloud-based security platform is a more secure and efficient way to connect users and applications, which eliminates the need for several layers of security (firewalls, VPNs, etc.) developed and built over the last couple of decades. While the pandemic crisis is likely disrupting some areas of Zscaler’s new sales funnel, the company is particularly well-suited to scale and accelerate our market share-gain thesis. Ninety percent of employees are remotely connecting to the enterprise IT network in today’s inverted world, as opposed to prior solutions which are geared to support 10%-20% of workers connecting remotely with the rest connecting from within the walls of a corporate network. Many employees have used traditional VPN connections to log into their networks remotely, but Zscaler’s platform offers a more secure connection without exposing an entire internal network, is easier to configure and is less costly to operate at scale. While the trend toward connecting remote devices over the Internet backbone remains firmly in motion, the stock appreciated over 300% in 2020, quickly outgrowing our small-cap market cap mandate, and we ended our successful campaign.”
6. NortonLifeLock Inc. (NASDAQ:NLOK)
Number of Hedge Fund Holders: 43
NortonLifeLock Inc. (NASDAQ:NLOK) offers extensive cyber safety solutions for customers in the United States, Canada, Latin America, Europe, the Middle East, Africa, the Asia Pacific, and Japan. The company was founded in 1982 and is based in Tempe, Arizona. On September 2, NortonLifeLock Inc. announced that it had won UK antitrust approval for its proposed $8.6 billion purchase of the antivirus company, Avast Plc. The acquisition was completed on September 12.
On September 20, NortonLifeLock Inc. disclosed that its President Ondrej Vlcek purchased 456,000 shares of common stock on September 15. The total transaction size was $10 million.
According to Insider Monkey’s data, 43 hedge funds were bullish on NortonLifeLock Inc. at the end of the second quarter of 2022, compared to 42 funds in the earlier quarter. Jeffrey Smith’s Starboard Value LP is the leading stakeholder of the company, with 19.20 million shares valued at $421.7 million.
In addition to Fortinet, Inc., CrowdStrike Holdings, Inc., and Palo Alto Networks, Inc., elite hedge funds are pouring into NortonLifeLock Inc. to benefit from the boom in the cybersecurity space.
Here is what ClearBridge Investments All Cap Value Strategy has to say about NortonLifeLock Inc. in its Q4 2021 investor letter:
“However, not every example has a cyclical dynamic. Consumer cybersecurity company NortonLifeLock undoubtedly benefited from the COVID-19 pandemic lockdowns as sales of personal computers and time spent online skyrocketed, as did subscriptions to the company’s security products. The market has lumped Norton into the “COVID winners” bucket and embedded a substantial reduction in subscriptions going forward as the company laps its strong results from the depths of the pandemic. While these concerns are reasonable for many within the COVID winner cohort, it is not the case for Norton. Company-specific improvements in marketing and product development have been just as powerful tailwinds to subscriber growth and would have continued to carry the company’s growth through the most difficult comparisons from 2020 even without the pandemic effect. The market’s concern about tailwinds turning to headwinds is overwrought, and contrary to the decline currently embedded in the stock price, we are confident that Norton’s earnings will continue to compound. Similar to EQT and OneMain, NortonLifeLock has been actively putting its ample cash flow generation to work to crystalize upside for shareholders. In addition to strong dividends and share repurchase activity, last year Norton announced the acquisition of “freemium” competitor Avast. Already attractive from a pricing standpoint, the acquisition creates the potential to generate immense cost and revenue synergies as well as providing Norton a strong foothold outside the North American market and a broader customer acquisition funnel. Once the transaction closes in 2022, Norton will have growing free cash flow generation of $1.5 billion and a clear path to an EPS of $5, yet a resulting valuation of just 5x earnings power. Given the high-single-digit revenue growth that Avast brings to the table, we believe the continuation of a valuation this depressed for Norton is highly unlikely.”
5. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 43
Fortinet, Inc. is a California-based provider of automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. On August 23, Fortinet, Inc. announced that it will jointly develop secure 5G networks for communication service providers as part of a global agreement with NEC. The former will offer security solutions, including its next-gen firewall FortiGate, while NEC will provide its expertise in the telecom industry to build carrier-grade, sustainable networks for deploying 5G technology.
On September 16, MKM Partners analyst Catharine Trebnick initiated coverage of Fortinet, Inc. with a Buy rating and a $70 price target. The analyst is optimistic about the company’s position amid network security consolidation. The analyst also believes that there are sufficient growth drivers for Fortinet, Inc. to sustain revenue growth of more than 20% beyond FY 2023, which is modestly above Street consensus.
According to Insider Monkey’s data, 43 hedge funds were bullish on Fortinet, Inc. at the end of June 2022, up from 39 funds in the earlier quarter. Jim Simons’ Renaissance Technologies held the biggest position in the company, comprising 4.8 million shares worth $272.3 million.
Here is what ClearBridge SMID Cap Growth Strategy has to say about Fortinet, Inc. in its Q3 2021 investor letter:
“Performance among our cohort of IT and Internet companies was mixed, with enterprise software makers thriving while more consumer-oriented stocks faced headwinds. Cyber security software maker Fortinet benefited from a heightened awareness of the need to protect against sophisticated attacks. We are attracted to the recurring revenue nature of these software companies that are increasingly delivering their products on a subscription basis through the cloud. Software business models also tend to avoid many of the inflationary issues facing companies with a physical product or service.”
4. Splunk Inc. (NASDAQ:SPLK)
Number of Hedge Fund Holders: 47
Splunk Inc. (NASDAQ:SPLK) was incorporated in 2003 and is headquartered in San Francisco, California. The company provides software and cloud solutions that deliver and operationalize insights derived from data generated by digital systems in the United States and internationally. Splunk Inc. recently reaffirmed its Q3 and FY23 guidance. It is one of the best cybersecurity stocks to buy now.
On September 27, Canaccord analyst Kingsley Crane told investors that Splunk Inc. CFO Jason Child is leaving the company in early November. The analyst said while the timing of the CFO’s departure is unexpected, it will not have a meaningful impact on shares. He reiterated a Buy rating and a $130 price target on Splunk Inc. shares.
Among the hedge funds tracked by Insider Monkey, Splunk Inc. was part of 47 public stock portfolios at the end of Q2 2022, compared to 42 funds in the preceding quarter. Alex Sacerdote’s Whale Rock Capital Management is the biggest stakeholder of the company, with 2.7 million shares worth $243 million.
Here is what Vulcan Value Partners has to say about Splunk Inc. in its Q2 2022 investor letter:
“Splunk Inc. is a software company for managing and gaining insights from data. Despite being a material detractor during the quarter, Splunk reported better than expected revenue, margins and guidance. Revenue increased 34% and the company produced a 20% free cash flow margin. Additionally, Gary Steele started his position as the new CEO. Gary was the founder of Proofpoint and led that company for 20 years prior to selling it to Thoma Bravo for $12 billion last year.
We believe Splunk’s long-term prospects remain strong. As they have transitioned their customers to the cloud, the company is generating good free cash flow and its margins are increasing and have the potential to expand. The company has a solid competitive position, a large market, and we expect its growth to be strong and durable.”
3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. is a Texas-based company that provides threat intelligence, managed security services, IT operations management, threat hunting, Zero Trust identity protection, and log management. CrowdStrike Holdings, Inc. announced on September 20 a deal to acquire the cybersecurity startup, Reposify. Reposify’s EASM capabilities will help advance CrowdStrike Holdings, Inc.’s Threat Intelligence and Security and IT Operations product suites.
On September 21, BTIG analyst Gray Powell maintained a Buy rating and a $234 price target on CrowdStrike Holdings, Inc.. The analyst said that the discussions with management have made him more confident in CrowdStrike Holdings, Inc.’s growth potential and its ability to withstand higher IT budget pressure amid a weakening economy.
According to Insider Monkey’s data, 77 hedge funds were bullish on CrowdStrike Holdings, Inc. at the end of Q2 2022, compared to 80 funds in the last quarter. Chase Coleman’s Tiger Global Management is the leading position holder in the company, with 6.5 million shares worth $1.10 billion.
Here is what Carillon Tower Advisers specifically said about CrowdStrike Holdings, Inc. in its Q2 2022 investor letter:
“CrowdStrike Holdings, Inc., a security software platform for protecting information technology assets and cloud workloads, delivered strong earnings results, with solid recurring revenue, customer growth, and profitability. Some investors, however, hoped for bigger numbers on the annual recurring revenue metric. Additionally, CrowdStrike has shown a desire to continue to hire to fuel growth, and so the expected increase in future profitability will be held back somewhat in the near term. We remain positive on the company’s prospects, as current geopolitical tensions make cyber security mission-critical.”
2. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 90
Palo Alto Networks, Inc. was incorporated in 2005 and is headquartered in Santa Clara, California. The company provides cybersecurity solutions worldwide. On September 19, Palo Alto Networks, Inc. announced that it is about to close a deal to acquire Israeli cybersecurity startup Apiiro for approximately $600 million.
On September 16, MKM Partners analyst Catharine Trebnick initiated coverage of Palo Alto Networks, Inc. with a Buy rating and a $250 price target as part of a broader research note on the Cyber Security Software Sector. Palo Alto Networks, Inc. is her top pick in the industry, due to the company’s 75% revenue from subscription services, the analyst told investors. The analyst further cited Palo Alto Networks, Inc.’s land-and-expand strategy, that is adding value to Network Security, Prisma Cloud, and Security Operations.
According to Insider Monkey’s second quarter database, 90 hedge funds were bullish on Palo Alto Networks, Inc., up from 87 funds in the prior quarter. David Blood and Al Gore’s Generation Investment Management is a prominent stakeholder of the company, with 733,482 shares worth $362.2 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Palo Alto Networks, Inc. was one of them. Here is what the fund said:
“The portfolio also saw solid performance from cybersecurity names Palo Alto Networks, Inc. which is gaining prominence as the risk of global cyber attacks increases as part of the Russian offensive. On an individual stock basis, leading contributors to absolute returns in the first quarter included positions in Palo Alto Networks.”
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG), the American technology conglomerate, announced in March 2022 that it will purchase the cybersecurity firm Mandiant Inc. for $23 per share in cash. The total value of the acquisition was $5.4 billion. The Mandiant purchase will result in Alphabet Inc. providing higher data security to its clients and it was Alphabet’s foray into the booming cybersecurity space.
Tigress Financial analyst Ivan Feinseth on August 3 raised the price target on Alphabet Inc. to $186 from $183 and kept a Strong Buy rating on the shares, citing the resiliency of its core business in Cloud and Search and the ongoing investment in Artificial Intelligence, which continues to drive “increasingly focused and helpful experiences for users and businesses.”
According to Insider Monkey’s data, 153 hedge funds were long Alphabet Inc. at the end of the second quarter of 2022, compared to 160 funds in the last quarter. Chris Hohn’s TCI Fund Management is one of the leading position holders in the company, with 2.5 million shares worth $5.4 billion.
Here is what Distillate Capital has to say about Alphabet Inc. in its Q2 2022 investor letter:
“The largest adds were Alphabet, the parent of Google, and Meta, formerly called Facebook. Alphabet came into the portfolio at the last rebalance after Q1 2022, but was increased again as valuation improved with a decline in enterprise value despite rising free cash flow estimates. Figure 13 plots the indexed change in Alphabet’s enterprise value and free cash flow estimates since the start of the year and the overall result looks very similar to the lines for Apple on the previous page. In conjunction with the stability in cash flows highlighted earlier, this makes Alphabet look very appealing. In contrast to Alphabet, Figure 14 shows the same indexed enterprise value and rolling next-twelve-month consensus estimate for free cash flow for Amazon, and highlights how Amazon’s performance has largely followed downward revisions in its estimated profitability.”
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