Lifelock: Securing Against Identity Theft
11/21/2014 7:00 am EST
‘Safety & Security’ is one of our PowerTrends and we are recommending an identity theft protection name, explains Chris Versace, editor of PowerTrend Profits.
What I like about Lifelock (LOCK) is not only its proactive identity theft protection for consumers, but also its fraud and risk solutions for the enterprise market as well.
The firm's fraud protection services—sold on a monthly or annual subscription basis—have an addressable market that spans more than 75 million potential users in the United States alone.
New services that include monitoring financial transactions have improved margins and boosted retention rates up from the 87% level.
It seems Lifelock has read the 2014 Verizon Data Breach Investigations Report that showed that, among the 1,367 data-loss incidents in 2013, 465 (roughly 34%) took place at financial institutions, while fewer than 150 (less than 11%) affected retailers.
According to the Credit Union Times, more than half of all credit unions are expected to miss an October 2015 date to issue cards equipped with chips.
Now, here’s the issue with that; as issuing banks in nearly every other G-20 nation have migrated away from magnetic strip technology to a substantially more secure technology, known as Chip-and-PIN, cybercrime and fraud have migrated to the United States. This growing pain point bodes well for Lifelock’s business and its shares.
Meanwhile, on the enterprise side of the business, the company inked deals with Comcast and continued to take share in the credit card industry by adding another top 10 US credit card issuer.
From a balance sheet perspective, Lifelock has no debt and more than $2.50 per share in cash. High customer retention offers good earnings visibility for the company.
The shift toward more feature-rich services across a growing customer base has helped the company deliver revenues and earnings that have topped expectations in the recent past to bode well for more of the same.
Given the growing risk of identity theft, my recommendation is to add LOCK shares. And, we’ll use any pronounced weakness to our long-term advantage to build out the position.
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