Image Source: Pixabay

An Introduction

With cybercrime damage reported (see here) to possibly reach $10.29 trillion by 2025 sophisticated cyber security is crucial to protect networks, systems and other digital infrastructure from malicious attacks (see here). It is estimated that cyber security spending was only $188B in 2023 and, with research (source) forecasting that corporate spending on cybersecurity should grow at a CAGR of 13.8% between now and 2030 (source) it suggests that a $2 trillion market exists for cyber security technology and service providers.

What is a Cyber Attack?

Simply put, as you may well know, a cyber attack is any malicious attack on a computer system, network, or device to gain access and information. They take many forms, such as: 

1. malware which is malicious software, including spyware, ransomware, and viruses. that accesses a network through a weakness such as a fraudulent link or email attachment;
2. phishing which involves a fraudulent message that appears to come from a legitimate source through email, text, or social networks with the goal is to steal information by installing malware or by cajoling the victim into divulging personal details;
3. man-in-the-middle which involves an attacker coming between two members of a transaction to eavesdrop on personal information;
4. denial-of-service which involves flooding systems with traffic to clog up bandwidth so they can’t fulfill legitimate requests and, thereby, shut down systems, and 
5. password attacks involve stealing passwords.

Defining Pure-Play Companies

As the word conveys, pure-play companies concentrate all their efforts on a single line of business and, of the 63 cybersecurity companies in the sector (see here) only 7 are publicly traded pure-play companies.

The Pure-Play CyberSecurity Software Stocks Portfolio

Shares of the 7 stocks in munKNEE's Pure-Play CyberSecurity Software Stocks Portfolio plummeted 12.5% in July primarily due to the weakness in the stock of cybersecurity software provider CrowdStrike (CRWD), a Portfolio constituent, which was DOWN 38.8% in large part as the result of a defective update being sent out on July 19th by the company that caused a global IT outage for Microsoft Windows hosts. (Read: How the world’s tech crashed all at once)

Below are how the 7 constituents performed in July (as of mid-day July 31st), in descending order, and YTD along with their market capitalization, and the most recent news, analyses and commentary on some of them. 

1. Check Point Software Technologies (CHKP): UP 11.6% in July; UP 20.5% YTD
   • Market Capitalization: $20B
   • Most Recent News, Analyses, and Commentary:
     • Check Point Software Announces New CEO & Reports Strong 2024 Second Quarter Results
     • Check Point Software Technologies Stock Outpacing Its Computer and Technology Peers
2. Tenable Holdings (TENB): UP 6.1% in July; UP 0.5% YTD
   • Market Capitalization: $6B
   • Most Recent News, Analyses, and Commentary:
     • Cybersecurity company Tenable reportedly exploring potential sale
     • Tenable Reports Q2 Earnings Today: What To Look For
3. Gen Digital (GEN): UP 4.3% in July; UP 14.2% YTD
   • Market Capitalization: $16B
   • Most Recent News, Analyses, and Commentary:
     • Gen Digital to Report Q1 Earnings Tomorrow: What's in the Cards?
4. Fortinet (FTNT): DOWN 2.2% in July; UP 0.7% YTD
   • Market Capitalization: $45B
   • Most Recent News, Analyses, and Commentary:
     • Will Fortinet (FTNT) Beat Estimates Again in Its Next Earnings Report?
5. Palo Alto Networks (PANW): DOWN 4.0% in July; UP 10.4% YTD
   • Market Capitalization: $105B
   • Most Recent News, Analyses, and Commentary:
     • Why Hedge Funds Are Bullish on Palo Alto Networks
     • Palo Alto Networks Stock Drops Despite Market Gains: Important Facts to Note
6. Zscaler (ZS): DOWN 5.8% in July; DOWN 18.3% YTD
   • Market Capitalization: $27B
   • Most Recent News, Analyses, and Commentary:
     • Here's Why Zscaler Stock Was Down 13% in the First Half of 2024
     • Zscaler Could Be a Great Addition to Your Portfolio; Here's Why
7. CrowdStrike Holdings (CRWD): DOWN 38.8% in July; DOWN 8.2% YTD
   • Market Capitalization: $57B
   • Most Recent News, Analyses, and Commentary:
     • Investors With Large Losses in CrowdStrike Holdings, Inc. Should Contact Bernstein Liebhard LLP To Discuss Their Rights
     • CrowdStrike shares plunge on report that Delta may seek damages

Summary

On average, the above 7 pure-play cybersecurity software stocks were DOWN 12.5% in July but remain UP 3.4% YTD.

Cybersecurity ETF

Investing in a basket of cyber security stocks is a quick and easy way to get investment portfolio exposure to this critical segment of the tech sector. The Global X Cybersecurity ETF (BUG), for example, consists of 31 stocks and has an expense ratio of 0.51%.

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