With accusations of Russian collusion in the 2016 election hamstringing President Donald Trump’s administration, internet security rapidly became a hot topic. No longer are hacking strikes limited to financial crimes or specific individuals. Many Americans believe that even our democratic procedures are seriously vulnerable to digitalized assaults. That foreboding sense of fear has been a boon for cybersecurity stocks — and more tailwinds should be expected.
According to Bloomberg, the cyberwar between the U.S. and Russia is presently the worst of its kind. Such animus may lead to severe consequences because of the lack of international rules and regulations. No definition of what exactly constitutes cyberwarfare exists. Even in outright warfare, established and recognized protocol governs combatant conduct.
Russian President Vladimir Putin proposed a bilateral solution to this problem to President Trump during the recent G-20 meeting.
Despite Putin’s perhaps genuine proposal, our government will not and cannot trust Russia’s overtures. Although Trump may have a “bromance” with Putin, Congressional leaders are increasingly wary of the relationship. We have many unresolved conflicts with Russia. Concession on any of these issues will be a sign of weakness, further fueling collusion accusations. However, this backdrop is exactly what the doctor ordered for cybersecurity stocks.
The only politically viable solution for the current administration is to shore up our network defenses. In this manner, we won’t have to negotiate with the Russians; instead, we will dictate terms. If countries don’t play nice with us, we will enact a digitalized version of mutually assured destruction. This dicey dynamic only bolsters the case that cybersecurity firms are the best stocks to buy at this juncture.
Cybersecurity Stocks to Buy: Proofpoint (PFPT)
Before “The Donald” became President of the United States, and not just of his business empire, few political pundits gave the mogul a chance. The one ace in Trump’s sleeve was former Secretary of State Hillary Clinton’s email scandal. By demonstrating recklessness towards safety protocols, Clinton gave Trump a sliver of hope, which he eagerly exploited. If only Clinton had sought the services of Proofpoint Inc (NASDAQ:PFPT), she may avoided the mess.
Proofpoint is a leader among cybersecurity stocks, specializing in wide range of threat protection services. Both mid- and large-sized companies have sought PFPT for delivering not just security, but also intelligent preventative measures.
One of their areas of expertise is email safety and protection. We should all be aware by now how much damage lax email security can render. But malicious attacks, such as ransomware, and business email compromise can cripple an organization’s operations and credibility. PFPT addresses these threats through a comprehensive security umbrella.
Just as importantly from an investment perspective, Wall Street loves their approach. Year-to-date, PFPT is up nearly 28%, making it one of the best cybersecurity stocks to buy. Furthermore, PFPT exhibits strong sales growth. Over the past seven years, corporate revenues have increased an average of 34%. Even better, the rate is only increasing as Proofpoint gets bigger. In the last four quarters, sales growth jumped to 43%.
With everyone focused on digital security, now is a great time to put PFPT on your stocks to buy list.
Cybersecurity Stocks to Buy: Fortinet (FTNT)
Although high-level hacks like the one the Democratic party suffered last year may seem like a world away for everyday folks, the harsh reality is that cybercrimes affect everyone. According to Stellar Blue Technologies, 73% of Americans have been victimized by some category of cybercrime. In addition, 90% of all businesses were hacked between August 2014 and August 2015. That number has surely increased two years on, which makes Fortinet Inc (NASDAQ:FTNT) all the more relevant.
Fortinent provides a broad suite of threat protection services, ranging from next-gen firewalls to cloud security. In addition, FTNT constantly researches the digital battleground, forecasting where and how the next attacks may occur.
What distinguishes FTNT from other cybersecurity stocks is their service-package adaptability to meet specific business needs. Fortinet’s clients range from small organizations to the world’s most popular brands. Also, the company serves an eclectic blend of industries, ranging from NFL teams to consumer electronics to government and healthcare.
Clearly, the corporate message resonated with Wall Street. On a YTD basis, FTNT is up over 34%, a powerhouse among cybersecurity stocks. More importantly, FTNT is one of the rare cybersecurity firms in that its financials are robust. The company has no debt, registers a highly stable 4.2 Altman Z-Score, double-digit sales growth, and is currently profitable.
That Fortinet engages one of the hottest sectors in the markets is a bonus. Make sure to consider FTNT on your stocks to buy list.
Cybersecurity Stocks to Buy: Imperva (IMPV)
When people think about cybersecurity stocks and the services that sector participants deliver, they focus on the external threat. But what about the internal threat?
Insider data breach is what keeps most business leaders awake at night. Trusted employees and contractors inflict the damage, not some hacker looking for a way in. As such, human resources, not cybersecurity firms, are the first line of defense.
Imperva Inc (NASDAQ:IMPV) would like to shift this paradigm. According to the IMPV website, “The greatest threat to enterprise security is the people already on the payroll.” Rather than a marketing ploy, IMPV has the evidence to back up their startling claim. According to Info Security magazine, insiders rendered 43% of total corporate data breach crimes.
What makes these attacks particularly vicious is that organizations have to provide access in order for employees and contractors to do their jobs. To address this rapidly rising epidemic, IMPV integrates a security algorithm in its clients’ networks. The algo detects any abnormalities, and immediately alerts security administrators. From there, the client can quarantine potential abusers for further investigation.
As with other cybersecurity stocks in this article, IMPV is enjoying a strong showing in 2017. On a YTD basis, shares are up over 29%. The company also has a strong balance sheet, accentuated with zero debt and high financial stability ratings.
Given its expertise on external and internal threats, IMPV is a great name to round out your cybersecurity portfolio.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.