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Raytheon: Top of the List in Cybersecurity
09/07/2016 7:00 am EST
From NASA to the Social Security Administration, the Secret Service to Treasury Department, government agencies use terribly outdated systems based on technology that is often decades old, explains Keith Fitz-Gerald, editor of Money Morning.
Thankfully, the government understands this, which is why the 2017 budget request to deal with the digital mess I've just described is a staggering $89 billion. And where's all that money going to go?
Raytheon Co. (RTN) is at the top of a very short list of qualified fixers. We've already enjoyed returns of 228% on this stock, but I believe you've got a great chance to line up another 100% winner if you get on board today.
Most investors believe that it's the smaller tech companies that are going to claim the lion's share of new technology investment dollars needed to thwart cyberterrorism. But that's not true.
It's the big companies like Raytheon that will be the real winners because they are the only ones with the size and scope needed to manage legacy systems.
What's more, those same big companies have the super-secret clearances needed to do the work that smaller contractors find increasingly impossible to obtain.
Raytheon has invested a jaw-dropping $3.5 billion in its cybersecurity business over the past 11 years that has, as of yet, gone almost totally unrecognized by the markets.
What really excites me, though, is something that very few analysts have focused on yet: Raytheon is leading the charge in teaching computers to defend themselves.
Current protocol involves a human identifying a problem, flagging it with a write-up, and then sending a report to higher ups who may take months to fix it, if ever.
But a computer capable of proactively identifying threats and healing itself could free up analysts to do what they do best… think ahead.
Raytheon's cybersecurity division, Forcepoint, more than tripled net sales last year, bringing in $328 million.
Overall, Raytheon recently beat earnings estimates by 2.9% while increasing them 6.1% year over year at a time when lesser companies are struggling just to make ends meet.
At the same time, the company increased guidance from $6.93-$7.13 per share to $7.13-$7.33 per share, making it one of the very few solid growth choices you can tap into today -- even without the cybersecurity potential.
By Keith Fitz-Gerald, Editor of Money Morning
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