Cybersecurity: "Enormous Potential"

06/16/2017 2:50 am EST

Focus: TECHNOLOGY

Jim Powell

Principal Analyst, Global Changes & Opportunities

Jim Powell, geopolitical expert and editor of Global Changes & Opportunities Report, has long been a proponent of investing in cyber security; here he looks at some of his favorite ways to play this sector.

The Internet is being weaponized and cybersecurity companies should be considered part of our defense industry. Investing in the most promising cyber companies has enormous potential to return legendary long-term profits — but you must expect a bumpy ride as the young industry shakes itself out.

After last month's WannaCry attack, cybersecurity became a top priority in organizations of every type throughout the world. The young cybersecurity industry also became a hot topic on Wall Street – and many stocks soared in price.

CACI International (CACI) is now up 48.6% for us. Its success should be no surprise. Unlike most companies in the young cybersecurity industry, CACI has been in business since 1962.

From its headquarters in Arlington, Virginia (right across the Potomac from Washington, DC), CACI serves the needs of many government agencies and numerous private companies.

It was only natural that many deep-pocket customers turned to CACI when cyber attacks started to become common — and especially when WannaCry showed up. That profitable relationship will undoubtedly increase.

Although CACI is up sharply from our purchase price, the outlook for more cybersecurity business is so great that I continue to recommend the stock.

I am also recommending Symantec (SYMC) once again. The WannaCry cyber attack is making it all the more important to protect your computer and online activities from hackers. The company offers a comprehensive line of products that protect personal computers from malware and viruses.

The company’s 22.8% gain was only half as large as CACI’s. However, Symantec does a great deal of business serving the needs of smaller companies and individual computer users. It’s a fast-growing market that is demanding better protection from cyber attacks.

Symantec has been growing rapidly in recent years by expanding its product line, and by acquiring other companies in its field. Symantec recently purchased LifeLock, the leading identity theft protection company.

The purchase of Blue Coat Systems gave Symantec more exposure to the fast-growing cloud security market. Symantec should continue to be a winner.

Proofpoint (PFPT) has also been in business longer than most of its rivals. Since 2002, the company has been one of the few to offer cybersecurity protection that meets legal and industry standards.

In the wake of WannaCry, many companies want to buy insurance against cyberattack losses. The standards pioneered by Proofpoint will help the new cyber insurance industry establish competitive rates. Proofpoint is up 41.1% for us, and should go much higher.

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