Is Mitek Systems, Inc. (MITK) the Best Cybersecurity Stock to Invest in Under $20?
We recently published a list of . In this article, we are going to take a look at where Mitek Systems, Inc. (NASDAQ:MITK) stands against other 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 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).
A close-up of a hand holding a smartphone, showcasing mobile financial applications.
Share Price: $8.30
Number of Hedge Fund Holders: 26
Mitek Systems, Inc. (NASDAQ:MITK) is emerging as one of the finest cybersecurity companies under $20 due to its strong position in the rapidly growing digital identity verification and fraud prevention areas. Mitek, headquartered in San Diego, California, provides a comprehensive portfolio of mobile image capture and digital identity products, including Mobile Deposit, Mobile Verify, MiSnap, Check Fraud Defender, MiVIP, and MiPass. Its cutting-edge tools enable secure transactions in the banking, finance, and corporate sectors worldwide.
Mitek Systems, Inc. (NASDAQ:MITK) reported positive results for its fiscal first quarter ending December 31, 2025. Total revenue increased marginally to $37.3 million, despite timing-related slowness in mobile deposit renewals. Notably, Identity product revenue increased 13% year-over-year, and the company maintained a good non-GAAP gross margin of 84%. Adjusted EBITDA increased 32% to $7.8 million, representing a respectable 21% margin. Mitek's free cash flow generation remained high, reaching $40.2 million over the last year, offering it flexibility as it prepares to meet the maturity of its 2026 convertible note.
Mitek's Check Fraud Defender product continues to grow significantly, with an annual contract value (ACV) approaching $12 million. Management reiterated its fiscal 2025 revenue projection, estimating $170-$180 million and improving the adjusted EBITDA margin outlook to 25%-28%.
Changes in strategic leadership contributed to increased optimism. Garrett Gafke, an industry veteran, was appointed Chief Operating Officer by Mitek Systems, Inc. (NASDAQ:MITK) on April 28, 2025. Gafke is a renowned pioneer in digital identity and fraud prevention. His hiring strengthens Mitek's strategic focus on expanding growth, especially as financial institutions and organizations throughout the world prioritize digital security and fraud prevention.
As digital fraud concerns increase and institutions need more secure, automated identity verification solutions, Mitek's specialized services and rising SaaS revenue streams position it for long-term, sustainable growth. Mitek Systems, Inc. (NASDAQ:MITK) is one of the best cybersecurity stocks with a strong balance sheet, recurrent revenue momentum, and new leadership.
Overall, MITK ranks 3rd on our list of best cybersecurity stocks to invest in under $20. While we acknowledge the potential of MITK, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MITK but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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