Guidance Software (GUID)
All of these previous plays are preventative cybersecurity companies. But what happens when something goes wrong? If you’re outsmarted by hackers, someone shares their password irresponsibly or the network just doesn’t function properly … where do you turn?
Guidance Software (GUID), that’s where.
Guidance positions its self as “the worldwide leader in digital investigations,” tracking down the culprits of hacking or identity theft and helping to repair the damage. The company positions itself much more as a detective than a security guard, with services that include “incident response” and “computer forensics” to help a business that has been hacked.
Several Fortune 100 companies use the EnCase platform, including video game giant Electronic Arts (EA), defense firm Lockheed Martin (LMT) and even tech giant Apple (AAPL). You can bet that these big firms all have cybersecurity software, too … but with so much riding on digital security, they aren’t comfortable trusting just one company to guard the door; they also want a detective waiting in the wings to track down any problems and fix them ASAP.
Guidance is a very small stock, under $300 million market cap, and has fallen over 25% year-to-date in 2013. That’s because revenue has rolled back substantially on the year — as it has for many enterprise tech firms — and because GUID is still operating in the red.
However, a turnaround in business spending and the secular growth of the cybersecurity industry could create a big tailwind for Guidance Software in 2014.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not own a position in any of the stocks named here. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.