Top Cybersecurity Stocks: 5 to consider now according to WarrenAI

Investing.com -- The cybersecurity sector continues to be a critical investment area as digital threats evolve in the new AI world and enterprises prioritize protection of their assets. Consolidation is ripe for the sector, as witnessed recently by Palo Alto Networks (NASDAQ:PANW)’ massive $25 billion takeover of CyberArk.

According to rankings from Investing.com’s powerful stock research assistant, WarrenAI, using Investing Pro’s Pro Score, Fair Value Estimates, and analyst price targets, several companies stand out as potential opportunities for investors looking at this space.

1. SentinelOne (NYNYSE:SE:S) emerges as the top-ranked cybersecurity stock, trading at a significant discount compared to growth peers (5x versus 14x sales). The company offers an impressive 25.7% fair value upside and 25.3% upside to analyst mean price targets. With a Pro score of 2.1, SentinelOne shows promise, though investors should note that persistent losses will require patience. In mid-July, Rosenblatt analyst Catherine Trebnick launched coverage on the stock with a Buy rating and $24 price target, calling it "significantly undervalued—trading at an approximate 40% discount to its peer group."

In recent news, SentinelOne announced that its AI security solutions are now available in the AWS Marketplace and that it has become a launch partner for the new AWS Security Hub.

2. Okta (NASDAQ:OKTA) secures the second position with 24% fair value upside potential. The identity management specialist boasts a solid Pro Score of 2.75 and provides 7.2% upside to analysts’ mean price target, indicating confidence in the company’s growth trajectory. Analysts at Cantor Fitzgerald recently said, "agentic security is at its core a data and identity problem, and Okta is well-positioned to benefit as AI agents reshape how identity is managed."

Okta reported 14% growth in calculated remaining performance obligations (cRPO) in its latest quarterly results and announced an expanded partnership with Palo Alto Networks.

3. Tenable (NASDAQ:TENB) ranks third with 17.3% fair value upside potential. The vulnerability management provider earned a Pro Score of 2.26 and offers substantial 27% upside to analysts’ mean price target, suggesting Wall Street sees significant growth potential. Tenable recently reported strong second-quarter financial results, with revenue up 12% to $247.3 million, and Non-GAAP diluted earnings per share was $0.34, compared to $0.31 in the second quarter of 2024.

Following the results, analysts at both Needham and Scotiabank (TSX:BNS) raised their price targets on Tenable, citing the strong performance and improved full-year guidance.

4. Palo Alto Networks (NASDAQ:PANW), widely recognized as the sector leader, comes in fourth. While the stock is trading in-line with its Fair Value Target (NYSE:TGT), it still offers 7.8% upside to analysts’ mean price target. The company’s premium pricing reflects its established market leadership and strong performance. As noted above, the big news from Palo Alto Networks was the takeover of CyberArk. Cantor Fitzgerald analyst Jonathan Ruykhaver was positive on the tie-up, saying , "[w]e see strong upside between CyberArk’s agentic identity capabilities and Palo Alto’s AI security platform, Prisma AIRS."

5. CrowdStrike (NASDAQ:CRWD) rounds out the top five, with its stock having soared an impressive 95.8% this year. Currently trading 17.8% above its fair value and 2% above analysts’ mean price target, CrowdStrike’s premium pricing reflects strong market confidence in its growth prospects. The company has bounced back from the massive July 2024 IT outage that affected 8.5 million Windows devices. The company is seen as a leader in securing AI.

CrowdStrike recently saw its outlook raised to positive from stable by Moody’s, which cited the company’s strong competitive position. The company also launched CrowdStrike Signal, a new suite of AI-powered detection engines.

These rankings highlight the varying investment profiles within the cybersecurity sector, from value opportunities like SentinelOne to established premium-priced leaders like Palo Alto Networks and CrowdStrike. Investors considering this sector may want to evaluate these options based on their risk tolerance and investment timeline.

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