Guest Post: #CyberSecurity #Stocks – A Closer Look $PANW, $HACK, $CYBR, $FEYE, $FTNT
Guest Post By Adam Sarhan SarhanCapital.com
Stock quotes in this article: $HACK, $CYBR, $FEYE, $FTNT, $BLOX, $PANW
The fundamental and technical case both remain strong for this relatively new and very important sector. One of the byproducts of the online, inter-dependent, and very “connected” world we live in is that cyber-security threats are a very serious issue. Moreover, cyber threats are growing exponentially and will continue to do so for many years to come.
We’ve seen a huge spike in data breaches over the past few years, including major incidents at the White House, Office of Personal Management, Neiman Marcus, Target and Home Depot. It reminds us of the computer-virus problems of the 1980s and ’90s. There was lots of money to be made then, and there’s lots of money to be made now.
A handful of cyber-security companies have gone public in recent years and are now emerging as a leading group on Wall Street. Leading names in the sector include: The PureFunds ISE Cyber Security ETF (HACK). As for individual stocks, some of my favorites, in alphabetical order, Cyberark Software(CYBR), FireEye (FEYE), Fortinet (FTNT), Infoblox (BLOX), and Palo Alto Networks (PANW).
The fundamental case for this nascent and growing space is strong. According to Forbes, Target’s 2013 data breach cost the retailing giant approximately $150 million, while Home Depot’s incident set the home-improvement chain back $62 million. A separate study showed that total worldwide costs for data breaches topped several-hundred-million dollars in 2014 and are growing at an astronomical rate.
This all translates into a huge opportunity for cyber-security firms. After all, the threat is worldwide rather than limited to one country, and most cyber-security companies offer subscription services that generate recurring revenue rather than one-time payments. So, the market for their services is virtually endless. Cyber-security threats are also here to stay regardless of what happens with the Fed, the broader economy or almost any other factor that can adversely affect stocks.
Furthermore, the sector is fragmented and potentially ripe for consolidation. Think of airlines 10 years ago — which could bode well for the future. Naturally, some of the older and larger tech names could easily come into the space and buy a few of these emerging players.
The technical case for the sector is also strong, as many stocks are trading near their respective 52-week highs and near important moving averages. Of course we are in the midst of earnings season and that could change the playing field.
The bottom line: It behooves each of us to protect our data — and these stocks are well-positioned to profit from this basic need.
Position in HACK