The recent attack on Apple Inc’s (AAPL - Analyst Report) iOS app store has forced the bellwether company to take serious cognizance of security issues. Once believed to be nearly impregnable, the iconic brand had to immediately launch a massive clean-up drive. Apple has had to remove around 40 apps from its store.

But this incident, coming on the heels of several others such as the federal government’s Office of Personnel Management’s (OPM) security breach, has yet again brought cybersecurity into focus. This should lead to increased activity for the cybersecurity companies. This is why it may be a good idea to add stocks from this sector to your portfolio.  

XcodeGhost Spooks App Store

The company has an app ecosystem which survived for many years without a serious malware attack. According to Reuters, only five apps from the official App Store have ever been found to contain malicious code.

Apple app creators utilize Xcode, a developer tools suit to create software for its app store. Apparently, hackers lured developers to utilize a duplicate version of Xcode called XcodeGhost to create iOS and Mac apps. This malicious code was then embedded into those apps. Though the malware has limited functionally and there aren’t any data thefts, it underscores the vulnerability of the iOS platform.

Apple has an extremely stringent screening process to detect malware. However, security researchers believe XcodeGhost’s breach of the procedure exposes the vulnerability of the iOS system to similar attacks in the future.

“Great Firewall” to Blame?

China’s authorities utilize strong controls on the Internet in that country. This “Great Firewall” of projects and legislations which seek to censor the Internet in China may be blamed partially. In addition, the infrastructure which connects China to the rest of the world is believed to be weak. This makes downloads from overseas slow and uneven.

Their combined affects mean that though downloading the official version of Xcode is possible, utilizing services from beyond the country’s borders is difficult. According to some Chinese companies, they were forced to download Apple’s developer suite from other sources within the country.

Per Palo Alto Networks Inc (PANW - Snapshot Report), XcodeGhost may have been downloaded from one of the Chinese servers as it allows faster downloads than Apple’s U.S. servers. The cybersecurity company said at least three dozen iOS apps, including important Chinese apps, were affected.

Some of the Chinese apps that were infected include WeChat and Didi Kuaidi. While the second of these is China’s answer to Uber Technologies Inc, WeChat comes from Tencent Holdings Ltd. (TCEHY - Snapshot Report).

However, there were no details available from Apple’s end. The company said that it was working with developers to help them use the original Xcode to rebuild their apps. 

Zero-Day Bounty Announced

Zerodium, a cybersecurity company, has said it is offering a bounty of $1 million to anyone who can hack into the newly launched iOS 9. The company is looking to reward those who discover zero-day vulnerabilities, namely a chink in the software’s security which is as yet unknown. It has also said that a cumulative amount of $3 million will be given to three teams of hackers or persons who can successfully launch an attack.

The company’s founder Chaouki Bekrar had previously founded another firm called Vupen. This controversial company based itself on selling computer glitches and related exploits. However, unlike Vupen which did all research internally, Zerodium only accepts external submissions. Analysts have described such companies as dealing in unsavory business. This is because it is nearly impossible to trace whether or not such discoveries fall into the wrong hands. 

Cybersecurity Still Matters

But not all cybersecurity companies come with Zerodium’s reputation. And the Apple incident only serves to highlight their growing importance. Over the past few years, numerous data breaches at high-profile business houses and government agencies prompted the need to impose tighter security measures.

Also, cyber security companies are witnessing double-digit growth, while overall IT spending is anticipated to grow just under 3% in 2015, according to research firm, Gartner. The research firm also estimates that worldwide spending on IT security in 2014 was about $70 billion, which is likely to jump to $76.9 billion in 2015.

Our Choices

With focus increasing on the security of virtual data, the cybersecurity industry will continue to grow. According to a market report by Cybersecurity Ventures, the worldwide industry is expected to grow from $71 billion in 2014 to over $155 billion in 2019.

Below we present some stock choices from the cybersecurity space, which are good choices in the current scenario. We have narrowed down our search based on good Zacks Rank and other relevant metrics.

CyberArk Software, Ltd. (CYBR - Snapshot Report) provides information technology security solutions. The company offers services which protect organizational privileged accounts from cyber attacks.

The company has a Zacks Rank #1 (Strong Buy) and expected earnings growth of 6.3% for the current year. The earnings estimate for the current year has increased 45.7% over the last 60 days.

IntraLinks Holdings, Inc. (IL - Snapshot Report) is a global provider of Software-as-a-Service solutions for securely managing content, exchanging critical business information and collaborating within and among organizations.

The company has a Zacks Rank #2 (Strong Buy) and expected earnings growth of 13.6% for the current year.  The earnings estimate for the current year has increased 16.7% over the last 60 days.

AVG Technologies N.V. (AVG - Snapshot Report) provides antivirus and Internet security products. AVG produces and develops software for, threat detection, threat prevention and risk analysis

The company has a Zacks Rank #2 (Strong Buy) and has a forward price to earnings ratio of 14.05. It has a price/earnings to growth ratio is 0.94, lower than the industry average of 1.54. The earnings estimate for the current year has increased 2.4% over the last 60 days.