Overview of Telos Corporation in the Cybersecurity Market
Telos Corporation (NASDAQ:TLS) is positioned within the growing landscape of cybersecurity stocks priced under $20. This article will examine how Telos compares to other notable stocks in the cybersecurity sector. The industry is experiencing significant momentum due to escalating cyber threats, innovative technologies like artificial intelligence (AI) and the Internet of Things (IoT), and an increased emphasis on national security and digital infrastructure. Despite challenges such as a notable shortage of skilled professionals and shifting geopolitical dynamics, the sector is expanding at a rapid pace, fostering a conducive atmosphere for innovation and investment.
Growth Projections for the Cybersecurity Industry
According to Fortune Business Insights, the global cybersecurity market was valued at approximately $172.24 billion in 2023 and is projected to skyrocket to $562.72 billion by 2032, representing a compound annual growth rate (CAGR) of 14.3%. North America, particularly the United States, is leading this growth, driven by the rise of e-commerce, the increasing digitalization of sectors like banking, financial services, insurance (BFSI), and healthcare, as well as heightened consumer awareness regarding cybersecurity.
Technology’s Role in Cybersecurity Solutions
Current cybersecurity solutions leverage cloud computing, AI, machine learning, and IoT technologies, empowering companies to detect and thwart digital threats in real time. However, with technological advancements come new risks. A report by McKinsey, published in November 2024, emphasizes the urgent need to enhance the security of AI systems. Cybersecurity firms are advised to focus on safeguarding their AI models and those utilized by their clients, as generative AI and third-party integrations introduce fresh vulnerabilities that demand more sophisticated and adaptive protective measures.
Impact of Policy Changes on the Cybersecurity Landscape
Significant policy shifts further complicate the landscape. Former President Trump’s implementation of punitive tariffs on technology imports has reverberated through the semiconductor and e-commerce industries. While certain tech firms may benefit from increased demand for logistics and supply chain management technologies, major companies have faced sharp declines in stock prices due to concerns regarding inflation and trade disruptions. Tariffs on imports from China and other major nations could lead to increased consumer prices and a constrained supply of essential cybersecurity components, particularly impacting cloud and data center operations.
Financial Implications of Cybersecurity Breaches
As companies grapple with rising stakes, nearly half of U.S. businesses have reported substantial revenue losses due to data breaches, according to data from Arcserve and IBM. In 2024, the average cost of a breach approached $4.9 million, with the expense escalating to $5.5 million if breaches took longer than 200 days to identify. The threat landscape is widening due to the emergence of generative AI, yet only 40% of Software as a Service (SaaS) offerings are actively monitored for security, placing additional strain on already overwhelmed security teams.
Workforce Challenges in Cybersecurity
Despite a global shortfall of 4.8 million cybersecurity professionals, a paradox exists in the workforce, as thousands of capable IT workers remain underutilized due to stringent hiring practices and insufficient investment in developing local talent. While academic qualifications and certifications are still valued, practical experience gained through labs, bug bounty programs, or internships is becoming increasingly critical. This combination of trends indicates a transformative shift in the cybersecurity sector, alongside rising demand for cybersecurity services.
Identifying Top Cybersecurity Stocks Under $20
To identify the best cybersecurity stocks priced under $20, we utilized the Finviz stock screener to filter for companies within the cybersecurity domain trading below this price point. After compiling our list, we analyzed hedge fund sentiment for each stock using Insider Monkey’s hedge fund holdings database. Stocks were ranked based on the number of hedge funds that held each stock, as recorded in the Q4 2024 database, resulting in a list of cybersecurity stocks under $20 that may have been overlooked by institutional investors, potentially representing undervalued opportunities in a swiftly evolving market.
Analyzing Telos Corporation’s Position
Telos Corporation (NASDAQ:TLS) offers cloud, enterprise, and cybersecurity solutions to both commercial and government clients worldwide. The company’s primary business segments are Security Solutions and Secure Networks, with its flagship products including IDTrust360 for trusted identity services and Xacta for cyber risk management. In the fourth quarter ending December 31, 2024, Telos reported revenues of $26.4 million, nearing the upper limit of its guidance range and reflecting an 11% sequential growth. Notably, Security Solutions contributed 83% of total sales, showcasing a robust 20% sequential revenue growth. The company achieved a record cash gross margin of 47%, the highest since its 2020 IPO, while its GAAP gross margin rose nearly 600 basis points year-over-year to 40.3%. Telos also anticipates positive cash flow for the first quarter of 2025 and significantly reduced its adjusted EBITDA deficit to $200,000.
Recent Developments and Future Prospects
On April 10, 2025, Telos Corporation announced a $5.8 million contract award to support the Department of Defense’s Microwave Line of Sight (MLoS) program, further solidifying its role in providing secure communication infrastructure for military personnel. Additionally, on January 29, 2025, Telos secured prime contractor status for the U.S. Navy’s SeaPort Next Generation (SeaPort NxG) contract, granting access to a government market opportunity valued at approximately $35 billion. Given its increasing backlog of federal contracts, enhancing margins, and the escalation of significant programs like TSA PreCheck and DMDC, Telos Corporation (NASDAQ:TLS) is emerging as one of the top cybersecurity stocks under $20 as we move into 2025.
Comparative Analysis with AI Stocks
While we recognize the potential of Telos Corporation, we believe that certain AI stocks may offer greater opportunities for higher returns within a shorter timeframe. For example, there is an AI stock that has seen gains since the start of 2025, while many well-known AI stocks have declined by around 25%. For those seeking an AI stock with promising prospects that trades at less than five times its earnings, further insights can be found in our report on this competitively priced AI stock.
