Cyber security issues are front and centre of discussion recently. The sector is outperforming the market year to date. Security has become a top priority for corporations and there is an expected rise in allocation to security spending to combat potential threats. There is rising concerns for possible interference in the upcoming elections and this also contributes to the bullish outlook on the cyber security sector.
Here are some publicly traded companies that are in the space:
💻 Cyber Security
Leonovus Inc (LTV-X)
A data storage company that specializes in block chain technology. They are working on a new token that can be a great opportunity.
Absolute Software Corp. (ABT-T)
A Canadian company that specializes in endpoint security and data risk management solutions. They have steady cash flow in a niche market.
Price target of $20.50 CAD. Cloud-based platform for enterprise and public sector. In the right place because of remote work. Should continue to go. Not cheap. Yield is 2.6%.
CGI Group (A) (GIB.A-T)
A global information technology consulting company out of Montreal. The charts are showing higher highs and lows. Their seasonality is Q4.
(A Top Pick Apr 09/20, Up 26%) It is not as racy as a SHOP-T. It is a large outsourcing firm. They have a great client base and are a great consolidator. They are always undervalued, caused by the organic growth being mid-single digits. The total growth is good. He is comfortable buying it here.
The company is consolidating and growing slowly at 5 – 10% earnings growth. They are currently transitioning from hardware to software focused on security solutions.
It got caught up in the Reddit squeeze. BB is still recovering from the collapse of its phone business and still have good patents what may pay off later. Be cautious given its recent run up. He wants to see fundamentals improve. Their cybersecurity efforts need patience. Look at this at C$10.
PureFunds ISE Cyber Security ETF (HACK-N)
This ETF allocates their funds in an interest way. Their top 10 holding account for only 34% of the fund. It is the best security ETF to diversify risk.
It is half software and half servicing and is a much larger ETF than many of its competitors'. There is a lot of small cap with risk. This is the one to be in if you want to be in the cyber security space.
Evolve Cyber Security Index ETF (CYBR-T)
This ETF is also considered recession-proof since cyber security is a necessity in today’s world. With the move towards more digital payments, it will get a lift.
As the world moves into digital money, cyber security will be more and more important. Short term, it is over-bought but when there are dips, you should buy. Multiples are quite high, so when the multiple contracts, buy in. A big trend for decades to come.
Akamai Technologies Inc. (AKAM-Q)
An American network and cloud service provider. It is one of the world’s largest distributed computing platform.
It's the largest cloud content delivery network. They beat the street last Tuesday, but plunged 9%. They delivered a good, but imperfect quarter. It was one of many tech stocks that reported good quarters last week, but still sold off.
Check Point Software Tech (CHKP-Q)
A multinational provider of software and hardware products for IT security. They are in the fibre security market and is one of the larger and more global company in the space.
It trades at 17x PE. Cybersecurity will be an big issue as companies around the world (the recent MSFT breach is an example). We've digitized so quickly during Covid, so that's led to more security problems, and this won't go away. Federal governments around the world are looking into these bad actors. CHKP has many…
Citrix Systems (CTXS-Q)
A multinational software company that provides software as a service and cloud computing technologies. They own the Go to Meeting brand used for managing remote networking and meetings.
Stockchase Research Editor: Michael O'Reilly CTXS is a cloud based subscription company that links internal business operations. A recent $2.5 billion acquisition will aid in their reach expanding further. Recent earnings beat analyst expectations and subscriptions are up over 60% on the year. It pays a small dividend that is backed by a payout ratio…
Elbit Systems (ESLT-Q)
An international defense electronics company engaged in a wide range of programs. They are also the world’s biggest producer of military drones. The company is also a big player in cyber warfare.
(A Top Pick Aug 02/19, Down 13%) They make defence electronics and a strong performer since their last acquisition. He's holding this long term. A headwind is the market moving towards cyclical businesses instead of defence stocks. But ESLT still has strong long-term prospects.
FireEye Inc (FEYE-Q)
An enterprise cyber security company that protects against advanced cyber threats. It is one of the imminent security as a service company.
Poster child when it comes to security as a service. Offer software instead of hardware, and the first to get in, so they have a lead. Instead, he owns Palo Alto and Splunk on the cybersecurity side. But it's on their shopping list, once markets settle down.
F5 Networks (FFIV-Q)
An American-based company that specializes in application delivery networking technology for security. They monitor the internet and servers.
Interesting company. Basically they monitor Internet to servers. Came out in March with some really disastrous earnings, but since then have come out with 2 really good quarters. Business has really picked up for them. Customers have come back. Have some new products out there. Really good cash flow going now.
One of the most prominent companies in technology and security. Their chips are used in a variety of phones and computers. The stock price has done extremely well.
Has been a long suffering value stock. Tech 1.0. Has been surprised by other faster growth tech companies. Fits in the value bucket. One of the top cheapest stocks in the S&P 500. Strong ROE at 25%, 8x enterprise value, 14x price to earnings. Balance sheet is clean. Small yield with good payout ratio. Starting…
Juniper Networks (JNPR-N)
A networking products company that owned Western Digital. They are in the router world that is critical to future growth of the internet.
Their suite of products is better than it was, though competition is fierce. He prefers Cisco for its CEO.
Lockheed Martin (LMT-N)
An American aerospace,m défense and security company with advanced technologies. It is not terribly overvalued and it’s recession-proof. They would profit from geopolitical issues.
LMT vs. GD vs. RTX When analyzing a company, you also want to analyze its peers. This is the case here. Instead, look at General Dynamics. They acquired CSRA, entrenched in cyber defense, and this is where corporate and government money will be invested. Also see Raytheon, a hybrid of a commercial application with a…
Northrop Grumman (NOC-N)
An aerospace and defense tech company. They broke above their 200 day average and increased their dividends. They are currently buying back shares.
(A Top Pick Sep 22/20, Down 10.6%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with NOC has triggered our recommended stop at $295. We recommend covering the position at this time. We will look for better opportunities.
Palo Alto Networks (PANW-N)
A network and enterprise security company. They dominate the cyber security space that is fairly valued. The company is currently transitioning from licenses to subscriptions.
The best cybersecurity play. It's tripled into the last 11 months, but was hammered in today's reopening rally and drubbing of tech stocks. Their last report beat the street, but their forecast merely met expectations, but this is priced for perfection. Expect volatility during the current rotation to reopening stocks.
Proofpoint, Inc. (PFPT-Q)
An enterprise security company that provides software as a service and products for cyber security. They mainly protect emails and are growing internationally.
A cybersecurity company that protects email. He likes their international growth opportunities. They seem to be latching onto Microsoft Office's 365; the more MSFT goes into the cloud, the more customers will need email protection, which is where PFPT comes in. He sees 25% upside in the next 12 months. He's been adding to his…
A major U.S. defense contractor. It is a hybrid defense stock that is involved in cyber security. It currently trades at a good valuation.
The defence contractor makes up 1/3 of business. The commercial aerospace side is 2/3 of their business which has suffered through 2020. Order books are filling up and things are changing. Priced very attractively right now. Should make $5.50-$6.00 per share. Dividends and buy backs should increase. A good industrial reopening trade. (Analysts’ price target…
Symantec Corp (SYMC-Q)
An American software company that offers security, storage and backup software. It is an anti-virus software company that is moving to a software as a service model.
A great company. Anti-virus software companies are moving to software as a service model, and this business is getting more competitive. But he doesn't know Symantec's funamentals, though he likes their business model. He would dig further and if it looks positive, then buy it.
A multinational tech conglomerate that develops networking hardware. It is a standalone product and are starting to adjust to cloud-based environment.
Pays a decent dividend and trades around 19x PE. It will benefit when 5G comes along. There's a lot of money for broadband growth coming as we transition to 5G networks. Not a pricey stock, but he sees more growth in software stocks. CSCO will do better though given 5G.
An American multinational tech company. They develop and manufacture computer software, personal computers and services. They are doing very well and have just bumped up dividends by 11%.
Today it announced it was buying Nuance, a healthcare AI tech company. MSFT is swimming in cash, and can absorb the price tag. MSFT's CEO told him today that this deal could double MSFT's total addressable market. It's MSFT's biggest deal since LinkedIn.