Frontline Companies in the $6 Trillion Cyber War
Press Releases
Nov 07, 2017
LONDON, November 7, 2017 /PRNewswire/ —
Cyber security is a megatrend that’s got horns just as big as the crypto currency bull. They’re both revolutionary elements of the digital era, and they both play a role in what is no less than World War III, unfolding in our cyber space.
Nothing can hold tech back right now, and precisely because of that, cyber security is becoming an even bigger bull. That’s because business is under assault across every industry, everywhere in the world. In focus today in the markets include: Quintiles IMS Holdings, Inc. (NYSE: Q), Cisco Systems, Inc. (NYSE: CSCO), FireEye, Inc. (NASDAQ: FEYE), Palo Alto Networks, Inc. (NYSE: PANW), Intel Corporation (NASDAQ: INTC)
What we’re seeing right now is a redistribution of wealth-and one of the biggest the world has ever seen. Why? Because the rise of advanced digital-era technology has led to the rise of an extremely sophisticated form of organized crime that moves off the streets and into the cyber space.
It’s going to cost us $6 trillion every year by 2021. In other words, it’s bigger than the worldwide trade in major illegal drugs.
This is the next world war, and industries are spending big to fight it because each single cyber breach costs around $4 million on average, and if you look just at the U.S. the cost per breach is upwards of $7 million.
This year has seen major activity on the cyber battlefield, and the last two months alone have seen attacks on Equifax, Deloitte and even the Securities and Exchange Commission (SEC).
Even so, these could have been just the test battles. The real war is yet to come, and cyber security companies are on the front line of the profit-making war machine.
Here are 5 stocks suiting up for battle:
#1 INTEL Corporation (NASDAQ: INTC)
This stellar chipmaker has had yet another good quarter, and they’ve also raised guidance for the full year. It’s facing stiff competition from Advanced Micro Devices (AMD), which just released two new chips, but the INTEL numbers don’t show this has had much negative impact. It has had a positive one, though, with INTEL rising to the occasion and keeping pace with the competitive drive. Next quarter’s outlook shows a sequential increase in operating income and earnings per share.
The company is also doing some cost-cutting and adopting a more reserved acquisition strategy.
All of this has combined to prompt analysts to raise their price targets on Intel shares. BMO Capital Markets has raised its rating for Intel to outperform. They see higher profitability next year and are raising the price target from $37 to $58. As of pre-market on Tuesday, 31 October, Intel was trading at $45.33. We like the fact that shares are trading at a 7% discount to Intel’s industry peers (on a free cash flow multiple basis, according to BMO).
#2 Hill Top Security Inc./Big Wind Capital (BWC; BGGWF).
With an estimated 4,000 cyber-attacks a day-and counting-the only serious solution to cyberwarfare is military-grade. And Hill Top is emerging as the first military-grade cyber defense solution that even small- and medium-sized business can afford.
This company-run by some of the best cyber minds in the U.S. defense industry, and all hailing from the military establishment-is offering three unique services that should strike major confidence in investors because there are some major gaps in cyber security that we haven’t been able to close.
The same people behind this company were hired by the intelligence community to build the auditing platform to track hundreds of millions in ‘black money’ that went missing from the U.S. government because it wasn’t directly allocated by Congress. They’ve successfully completed government contracts which center on fraud and abuse and detection of financial anomylies.
Hill Top Security (Is currently merging with Big Wind Capital ) offers a unique, proven platform-and the first in the world-that gives small and medium businesses the ability to protect themselves and their clients in the cyber space. Now it’s targeting SMBs, which number over 27 million, revenue from the first public sector clients is coming online and is expected to eclipse government revenues at a fast pace.
They one-up the competition in this space not only by opening things up to SMBs, which a single breach could close down, but also by not just reacting to cyber-attacks but by preventing them as well. Hill Top’s artificial intelligence (AI) predicts threats for you, and alerts you to any suspicious activity. And their platform is secure enough to have gained the trust of the U.S. Defense Department.
Hill Top’s Vauban DNA system was originally developed as a global logistics solution for massive parallel events (think UPS). But then it added an intelligence-gathering element with military-grade security for the U.S. government. Now it’s also the new breed of financial security, with cryptocurrency tech incorporated to support market trading and transactions.
It’s also made Hill Top a takeover target, catching the eye of Big Wind Capital Inc. (BWC; BGGWF). In July, Big Wind announced it would acquire Hill Top, and just last week this deal was concluded for this premier military-grade cyber security company.
This is where something that’s been confined to elite cyberdefense circles starts pinging the mainstream investor radar. We think that this company could take real cyber security mainstream, and we expect the news flow to be fast-paced.
#3 Palo Alto Networks Inc. (NYSE: PANW)
While newer on the cyber security scene, Palo Alto has been rather disruptive, introducing a firewall that controls how data flows through a company’s corporate infrastructure. It’s about network security, and so far the market is pretty happy with its performance. Between 2013 and 2016, PANW revenues jumped 248%, hitting $1.4 billion. It’s been a bit of a volatile ride, though.
We like the fact that the company is now transitioning to a subscription sale model for its products, and away from one-time sales. But this transition is never easy and share prices reflect the hiccup in near-term revenue-growth expectations. That said, this subscription model could make its future profits a lot more consistent. It also means it might be a good time to get in on Palo Alto.
Trading with a market cap of $13.5 billion, Palo Alto is projecting the data infrastructure of an estimated 85 Fortune 100 companies, just for starters. It’s also captured the next-gen firewall solutions for more than half of the Global 2000. It’s Q3 earnings were impressive, hitting $431.8 million, and expansion seems a sure thing. It beat analyst estimates by 13 cents in Q3, and a significant number of analysts see earnings boosts for 2018.
#4 FireEye Inc. (NASDAQ: FEYE)
This is one of the most impressive cyber-security barn-stormers out there. It only went public in September 2013, and already by December that same year it was spending $1 billion on a major acquisition, Mandiant which was one of the top data breach and response companies in the space.
This is now a massive and fast-growing company of highly sought-after cyber experts and products, all rolled into a cloud-based platform that is a favorite among key Fortune 500 companies, not to mention Global 2000 companies.
There was a very aggressive acquisition spree here, that has slowed down-and since last year, the company moved into the black. FireEye peaked in mid-2015 at $55 a share, and then slid to under $11 in mid-March this year. But since then, it’s pushed back up to $17 (as of pre-market trading on Tuesday, 31 October). Overall, it’s trajectory looks solid, especially in the current cyber warfare climate.
FEYE has delivered positive earnings for 13 straight quarters, not counting Q3 2017 for which results were scheduled for 1 November, right after the time of writing.
#5 Cisco Systems Inc. (NYSE: CSCO)
This giant, $170-billion market cap company is looking for a turnaround, and it might get it. This is a networking products giant, and cybersecurity hasn’t been its bread and butter, accounting for only $500 million of its total revenues. But this is where things start to change. Cisco’s newest security software is said to be more predictive in preventing threats and recognizing traffic patterns that could indicate a breach attempt. It’s quite possible that this is Cisco’s resurgence into cyber security.
It’s definitely been busy reorganizing. It’s laid off 6,600 people over the past year and it was all about rethinking focus and moving onto the cybersecurity battle field. It’s also partnering with Apple to develop a tool for controlling iOS devices for enterprise cybersecurity teams.
It’s been a rough road, but transitions always are. It’s seen seven consecutive drops in quarterly revenue, and cybersecurity remains only a drop in its revenue bucket. But it’s a cheap stock (one of the cheapest in the industry) and if it’s making a bold re-entry into one of the hottest sub-sectors right now, this might be a good time to get in.
Other companies to keep on your watchlist in the cyber security space:
Quintiles IMS Holdings, Inc ( NYSE: Q) is one of the world’s “most admired companies” according to Fortune Magazine. Spanning over 100 countries, Quintiles IMS is definitely ahead of the pack. Quintiles IMS provides research and development solutions to pharmaceutical, biotech, and security industries that push healthcare forward using data and technology.
Founded in 1982, it is safe to say that Quintiles IMS has been around the block a few times. The company’s strong management and forward-thinking attitude provide investors reassurance in a chaotic marketplace. As the world’s largest contract research organization, the company has key relationships throughout the global medical field, making it a strong bet for potential investors.
Applied Materials Inc.: Up around nearly 8% over the past month, AMAT is one of the top-performing stocks in the tech sector and it’s got strong fundamentals to support this bull run. Catalysts are mounting, particularly with an inflection-focused innovation strategy driving growth steadily. AMAT is continually advancing its semiconductor and display technology, and now it’s ramped up to 3D NAND, which has boosted its market share attractively. And it’s not just about semiconductors: it’s also gunning for new market opportunities with advanced display tech, like OLED.
By. Charles Kennedy
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Forward-Looking Statements
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include: that cybersecurity and information security industries will continue to grow as expected; that Hill Top Security Inc. (“Hill Top“) will be acquired by Big Wind Capital Inc.; and that Hill Top could take real cyber security mainstream. Risks that could change or prevent these statements from coming to fruition include: that cybersecurity and information security industries will not grow as quickly as expected or that such industries will decline in size; that Hill Top will not be acquired by Big Wind Capital Inc.; and that Hill Top will not take real cyber security mainstream. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The forward-looking statements contained in this news release reflect the current expectations, assumptions and/or beliefs of the writer based on information currently available to the writer. In connection with the forward-looking statements contained in this news release, the writer has made assumptions about: expected growth in the cybersecurity and information security industries; that Hill Top will be acquired by Big Wind Capital Inc.; and that Hill Top will take cyber security mainstream. The writer has also assumed that no significant events will occur outside of Hill Top’s normal course of business. Although the writer believes that the assumptions inherent in the forward-looking statements are reasonable, the forward-looking statements are not a guarantee of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. The forward-looking information contained herein is given as of the date hereof and the writer assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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