For as long as the stock market has existed, investors have been profiting from advances in technology. The past year has created an acceleration in many of the tech trends that investors had been following.
We saw surges in working from home, learning from home, expansion in online retail, just to name a few.
To make this transition easier, we’re moving information and networks out of the server room and onto the cloud.
International Data Corporation (IDC) measures the amount of data created and consumed in the world each year. According to the company’s most recent annual report, 64.2 zettabytes of data was created or replicated in 2020. That’s 64.2 trillion gigabytes.
The company estimates that the amount of digital data created over the next five years will be greater than twice the amount of data created since the advent of digital storage.
That means companies that provide the digital infrastructure for this trend will continue to see growth. And all this data creates the need for IT management and increased awareness of cybersecurity.
Just look at what happened over the weekend: Miami-based company IT management company Kaseya Ltd. knew that its software had some vulnerabilities. It had been working on getting them fixed when hackers used them to push ransomware instead. As many as 1,500 companies could have been affected by this attack.
And this isn’t the only attack that we’ve seen this year. There have been major attacks on McDonald’s Corp. (NYSE: MCD), JBS S.A. (OTCPK: JBSAY) and Colonial Pipeline Co.
John Chambers, former CEO of Cisco Systems, Inc. (Nasdaq: CSCO), believes “U.S. companies are expected to endure over 65,000 ransomware attacks this year — and that’s a conservative number.”
Just as Google has become a verb and Amazon.com, Inc. (Nasdaq: AMZN) has become the go-to for online retail, I’ve been expecting to see someone rise to the top of cybersecurity … someone to become the household name for protecting data everywhere.
Instead, I took the time to search for some lists of the “top cybersecurity stocks.” These were lists made by other sources and used various criteria.
I then headed over to the Weiss Ratings website to see what we thought of some of these “top stocks.”
Only two of them had a “buy” rating, so let’s take a look.
First up is Fortinet, Inc. (Nasdaq: FTNT), which claims to secure the largest enterprise, service provider and government organizations around the world. More than 500,000 customers trust Fortinet to protect their businesses, including the majority of Fortune 500 companies.
The company’s flagship product is FortiGate, which is available to fit any enterprise environment and provides a broad array of next-generation security and networking functions.
Fortinet has mostly maintained a “buy” rating since August 2018, with two brief dips into “hold” territory. Shares are up 30% over the past two months and 82% over the past year.
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This is definitely a cybersecurity company that investors should keep an eye on. The other cybersecurity company I found with a “buy” rating was CACI International Inc. (NYSE: CACI).
It’s usually been a “buy” since 2014, with only two brief slides into the “hold” range. However, both of those slides have happened within the last year.
The company provides expertise and technology to its customers in support of national security mission and government transformation for defense, intelligence and civilian customers.
CACI just announced last month that it was awarded a four-year $82 million contract to continue support for the Army’s cyber and ground electronics warfare missions.
I really like its strong balance sheet, and it looks poised to continue winning government contracts.
Although it trades around the same price as Fortinet, shares haven’t been seeing that same kind of run-up. Shares are only up 2% in the past three months and 25% over the past year. Either way, this is another company that investors should keep an eye on.
I also found many cyber picks with “hold” ratings. I don’t think any are worth mentioning right now, but I will keep an eye out to see if there’re any upgrades to their ratings.
It’s only a matter of time until one of these companies pulls ahead as the clear innovator of cybersecurity. And it just might be Fortinet or CACI.
I’ll be closely watching, and you should, too.
Best,
Kelly Green
