Increasing number of cyber attacks are keeping governments and companies over the world on their toes. As companies move their digital assets to Cloud platforms, their anxiety around the security of their data is increasing. That’s why cybersecurity companies are continuing to see an increasing demand of their products from government and private sectors. According to a Bloomberg report published in November, Ivana Delevska, chief investment officer at Spear Invest, said that security is usually the last area to see budget cuts in the enterprise sector. That’s why the analyst thinks the cybersecurity domain is expected to keep growing despite recession fears.
“This constant underpinning of demand makes security a very attractive space, which is why people are getting in even though there’s so much uncertainty everywhere else,” Delevska reportedly said.
Cybersecurity’s Resilience
The Bloomberg report mentioned a Morgan Stanley survey which sheds light on the resilience of the cybersecurity sector. Morgan Stanley’s quarterly survey showed that the demand in the broader software sector was slowing amid recession fears. However, according to the survey, top software executives said security was a top priority.
The Bloomberg report also said that stocks in the cybersecurity group looked cheaper than the broader software sector. The security index, back in November when the report was published, was trading at 26 times estimated earnings and 1.3 times sales. The broader software sector index showed these reading at 28 and 5.7, respectively.
Ryan Issakainen, senior vice president of First Trust Portfolios, according to the Bloomberg report, thinks the cybersecurity sector remains strong because cyber criminals are operating in a space that is not tied to the broader economy.
In an interview with BNN Bloomberg, Daniel Ives, chief strategy officer and head of technology research at GBH Insights, said that as companies move to Cloud, security remains the main focus of their attention. He said that Cloud security is becoming one of the biggest themes of the cybersecurity market. He also talked about the mergers and acquisitions activity taking place in the industry and talked about some notable companies, including Cisco, Zscaler and Qualys Inc.
Photo by Kaur Kristjan on Unsplash
Our Methodology
For this article, we scanned different ETFs tracking cybersecurity stocks and picked the most notable cybersecurity stocks that outperformed the broader markets in 2022. All but one stock in our article posted positive performance in 2022. We compare the performance of these stocks to the broader indexes like S&P 500, which fell about 19% in 2022, and NASDAQ, which fell about 30%. When compared to these indices, the cybersecurity stocks in our article outperformed. The stocks are ranked in ascending order of their 2022 performance.
12 Best Performing Cybersecurity Stocks in 2022
12. Juniper Networks, Inc. (NYSE:JNPR)
Performance in 2022: -4%
Juniper Networks, Inc. (NYSE:JNPR) ranks 12th on our list of the best-performing cybersecurity stocks of 2022. Juniper Networks, Inc. (NYSE:JNPR) offers a variety of cybersecurity solutions, including The Next-Generation Firewall (NGFW), public Cloud security products, end-to-end security solutions and secure data centers. For the third quarter, Juniper Networks, Inc. (NYSE:JNPR) posted revenue growth of about 19% on a year-over-year basis. Net income in the period jumped 26% when compared to the comparable period last year. Juniper Networks, Inc. (NYSE:JNPR) said that based on the current demand, it expects to post strong revenue in the fourth quarter. It also expects to see sustained growth in 2023 and beyond.
For the fourth quarter, Juniper Networks, Inc. (NYSE:JNPR) expects revenue of $1.475 billion plus or minus $50 million, much better than the consensus of $1.42 billion.
11. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Performance in 2022: +1.16%
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is one of the notable cybersecurity companies in the world. Check Point Software Technologies Ltd. (NASDAQ:CHKP) offers anti-ransomware solutions, end to end security, Cloud security and several other solutions. Check Point Software Technologies Ltd. (NASDAQ:CHKP) gained about 1.16% in 2022, outperforming the market. In December, Check Point Software Technologies Ltd. (NASDAQ:CHKP) fell after it approved a 1-for-10 reverse stock split of its common stock. The reverse stock split will reduce common stock to about 9.3 million. Check Point Software Technologies Ltd. (NASDAQ:CHKP)’s revenue in the third quarter jumped about 66% to reach $0.05 million. GAAP EPS in the period came in at $0.12, beating estimates by $0.03.
As of the end of the third quarter, 32 hedge funds tracked by Insider Monkey reported having stakes in Check Point Software Technologies Ltd. (NASDAQ:CHKP), compared to 34 funds in the previous quarter. The total value of these stakes was $680 million.
10. VMware, Inc. (NYSE:VMW)
Performance in 2022: +5%
VMware, Inc. (NYSE:VMW) is one of the biggest Cloud computing companies in the world. VMware, Inc. (NYSE:VMW)’s cybersecurity solutions help companies protect their digital assets. VMware, Inc. (NYSE:VMW) is known for its cybersecurity solutions for financial companies, healthcare services providers and government and state institutions. Some of the famous cybersecurity products offered by VMware, Inc. (NYSE:VMW) include VMware Contexa. VMware, Inc. (NYSE:VMW) shares gained about 5% in 2022, outperforming the market. In November, VMware, Inc. (NYSE:VMW) posted its third-quarter results. Adjusted EPS in the period came in at $1.47, missing estimates by $0.13. Revenue in the period gained 0.6% to reach $3.21 billion, missing estimates by $160 million.
As of the end of the third quarter, 63 hedge funds tracked by Insider Monkey reported having stakes in VMware, Inc. (NYSE:VMW), compared to 52 funds in the previous quarter.
9. International Business Machines Corporation (NYSE:IBM)
Performance in 2022: +8%
Tech giant International Business Machines Corporation (NYSE:IBM) needs no introduction. International Business Machines Corporation (NYSE:IBM) is also famous for its cybersecurity solutions. Some of the most famous cybersecurity products offered by International Business Machines Corporation (NYSE:IBM) include QRadar, IBM Security® Verify Privilege Vault, IBM Security Trusteer Pinpoint Detect and IBM Security zSecure Admin.
Of the 920 hedge funds tracked by Insider Monkey, 40 hedge funds reported having stakes in International Business Machines Corporation (NYSE:IBM). The total value of these stakes was $869 million. The biggest stakeholder of International Business Machines Corporation (NYSE:IBM) was Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital which reported owning a $515 million stake.
Earlier this month, International Business Machines Corporation (NYSE:IBM) shares gained after investment firm MoffettNathanson upgraded International Business Machines Corporation (NYSE:IBM) to Market Perform from Under Perform. The firm’s analyst Lisa Ellis said International Business Machines Corporation (NYSE:IBM) could benefit from the growth in the IT services sector in 2023.
8. CACI International Inc. (NYSE:CACI)
Performance in 2022: +11%
CACI International Inc (NYSE:CACI) offers cybersecurity solutions in important domains like diagnostics and mitigation of cyber threats, accelerated authority to operate (ATO) lifecycle processes, threat analysis and cyberspace exploitation expertise. Earlier in January, Morgan Stanley upgraded CACI International Inc (NYSE:CACI) to Overweight from Equal Weight. CACI International Inc (NYSE:CACI) said that CACI International Inc (NYSE:CACI) is positioned to benefit from the increase in spending by the US government. CACI International Inc (NYSE:CACI) is indeed winning government contracts. It recently won a five-year contract by the Defense Counterintelligence and Security Agency to provide background investigation fieldwork services, valued at $2.25 billion.
Similarly, CACI International Inc (NYSE:CACI) was awarded a single-award prime contract worth up to $284 million by the National Security Agency. CACI International Inc (NYSE:CACI) will provide expertise and systems engineering support for NSA’s Cybersecurity Directorate.
A total of 29 hedge funds tracked by Insider Monkey reported having stakes in CACI International Inc (NYSE:CACI), compared to 22 funds in the previous quarter. The biggest stakeholder of CACI International Inc (NYSE:CACI) was Murray Stahl’s Horizon Asset Management, which had a $118 million stake in CACI International Inc (NYSE:CACI).
7. KnowBe4, Inc. (NASDAQ:KNBE)
Performance in 2022: +11%
KnowBe4, Inc. (NASDAQ:KNBE) is a Florida-based company whose solutions help companies beef up their online and enterprise security. KnowBe4, Inc. (NASDAQ:KNBE) shares gained about 11% in 2022. KnowBe4, Inc. (NASDAQ:KNBE) products are mostly designed to help businesses train their employees on cybersecurity, phishing attacks, password security and other workplace-related online security best practices. Its products include Kevin Mitnick Security Awareness Training program, Compliance Plus, PhishER and Compliance Manager. These programs are used by different companies to prepare their systems for cyber-attacks.
Hedge fund sentiment is strong for KnowBe4, Inc. (NASDAQ:KNBE). As of the end of the third quarter, 28 hedge funds tracked by Insider Monkey reported having stakes in KnowBe4, Inc. (NASDAQ:KNBE), compared to 12 funds in the previous quarter. The total value of these stakes was $484 million. The biggest stakeholder of KnowBe4, Inc. (NASDAQ:KNBE) at the end of September was Robert Smith’s Vista Equity Partners with a $342 million stake. Another notable stakeholder of KnowBe4, Inc. (NASDAQ:KNBE) is Alexander Captain’s Cat Rock Capital which owns a $25.3 million stake.
6. A10 Networks, Inc. (NYSE:ATEN)
Performance in 2022: +15%
A10 Networks, Inc. (NYSE:ATEN) is one of the best-performing cybersecurity stocks of 2022. A10 Networks, Inc. (NYSE:ATEN) provides solutions that help organizations tackle key issues like DDoS attacks. A10 Networks, Inc. (NYSE:ATEN) is an important player in the Application Delivery Controller (ADC) space. Its Thunder ADC products and Lightning ADC delivery controller products allow companies to implement advanced server load balancing, aFleX scripting and DNS firewalls. In the third quarter, A10 Networks, Inc. (NYSE:ATEN)’s revenue jumped about 10.2% to reach $72.1 million. Adjusted net income in the period came in at $15.9 million, or $0.20 per diluted share, compared to $13.7 million, or $0.17 per diluted share, in the same quarter last year.
As of the end of the third quarter, 22 hedge funds tracked by Insider Monkey had stakes in A10 Networks, Inc. (NYSE:ATEN). The total value of these stakes was $113 million.
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Disclosure: None. 12 Best Performing Cybersecurity Stocks in 2022 is originally published on Insider Monkey.