Protect Your Portfolio With These 3 Cybersecurity Stocks
The recent security breach of the federal government’s Office of Personnel Management (OPM) has yet again brought cybersecurity to the forefront of the public’s attention. The breach, which affected over 10 million current and former public employees and compromised over 30 years’ worth of private data, is being blamed on faulty IT security on behalf of the OPM and its contractors.
As the public pays more attention to the security of our 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.
This latest hack is just the most recent in a long list of breaches and it is really putting the sector in focus. Now, companies are really starting to feel the pressure to beef up their security profiles which is great news for firms that sell services in this space.
This could make now the perfect time to give cybersecurity stocks a closer look for your portfolio. There are many interesting companies in this space, but we have highlighted three below which could play off of recent trends and be excellent choices for those who want to tap into this quickly-growing corner of the market:
1. Vasco Data Security International, Inc. ( VDSI )
Vasco Data Security is an Illinois-based company that creates security systems for corporate and government customers. They specialize in security for mobile apps, cloud storage, and online transactions. With share prices jumping nearly 4% on Friday, VDSI is clearly a hot stock.
Vasco is the only one of these three companies that falls into the “Integrated Systems” industry, which currently holds a Zacks Industry Rank in the Top 28%. Recent trends indicate that this is a strong industry right now, but more specific trends on VDSI better highlight the strength of this stock.
VDSI currently holds a Zacks Rank #1 (Strong Buy). The strength of Vasco’s stock lies in its ability to outperform expectations. VDSI’s latest quarterly EPS beat estimates by over 116%. Overall the company has beaten estimates by an average of 158% over the last year. Investors should expect VDSI to continue to perform, as we have seen rising earnings estimates as of late suggesting a strong growth path ahead for VDSI.
2. Barracuda Networks, Inc. ( CUDA )
Headquartered in Campbell, California, Barracuda Networks designs and delivers security and storage systems. The company focuses on three markets: content security, networking and application delivery, and data storage.
Barracuda falls into the “IT Systems” industry, which holds a Zacks Industry Rank in the Top 41%. CUDA also has strong EPS growth of over 20% along with a ‘B’ for Growth suggesting it is a great choice for growth investors.
We should also note that Barracuda does hold a Zacks Rank #2 (Buy) making it a compelling short term choice as well. Earnings estimate revisions have been moving in the right direction for this cybersecurity company and we could see fresh 2015 highs soon.
3. CyberArk Software Ltd. ( CYBR )
CyberArk is an Israeli company that specializes in protecting accounts from cyber-attacks. The company offers several products that protect passwords, close loopholes being hijacked by attackers, and secure cloud-based assets.
CyberArk’s stock finds its strength in its rapid growth and consistent outperformance of earnings estimates. The company holds a Style Score grade of “B” in growth, and currently has a Zacks Rank #2 (Buy). In the latest earnings report, CyberArk beat out its estimated EPS by 275%. At the end of 2014, the company beat their EPS estimates by an incredible 1,800%.
CyberArk highlights exactly what can happen in today’s cybersecurity industry. Consumers are eager to protect their data, and every time a horror story like the breach at the OPM hits the news, the demand for improved technology increases. Investors should consider these cybersecurity companies for their portfolios, and especially considering they all have strong Zacks Ranks too.
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