An Introduction

With cyber crime damage reported (see here) to possibly reach $10.29 trillion by next year sophisticated cyber security is crucial to protect networks, systems and other digital infrastructure from malicious cyber attacks (see here). On the other hand, however, 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 many cybersecurity software and hardware companies should be excellent long-term buys.

By Lorimer Wilson

What Are the Many Forms Of A Cyber Attack?

A cyber attack is any malicious attack on a computer system, network, or device to gain access and information and 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.

What Are The Main Types Of Cyber Security?

Cyber security is what organizations do to protect their own and their customers’ data from malicious attacks and there are 4 types, namely:

1. Network security: protects the connections between networks, including data transfers to and from the internet, and hardware like routers and switches
2. Endpoint security: protects devices like laptops, phones, and servers
3. Application security: protects software, data and access at the individual application level
4. Cloud security: protects cloud environments and data from vulnerabilities and threat actors (source)

AI’s Role In Cyber Security

AI enables cyber security companies to train their models with data from previous attacks to create autonomous systems that can detect if an attack is ongoing based on certain readings thereby increasing companies’ lead time for an attack and allowing them to prepare mitigation and response strategies. Video: How AI is changing the cybersecurity landscape

The Pure-Play CyberSecurity Software Stocks Portfolio

eSecutityPlanet.com provides a list of cyber security companies (see here) of which the 5 largest of those companies (i.e. +$20B in market capitalization) are monitored in our Pure-Play CyberSecurity Software Stocks Portfolio. The Portfolio plummeted 15.1% 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 that caused a global IT outage for Microsoft Windows hosts. (Read: How the world’s tech crashed all at once)

Below are how the 5 constituents performed last week, in descending order, and in August, and YTD, along with their market capitalizations, and the most recent news, analyses and commentary on some of them.

1. Palo Alto Networks (PANW): UP 3.4% last week; UP 11.7% in August; UP 23.0% YTD 
   • Market Capitalization: $117.5B
   • Most Recent News, Analyses, and Commentary:
     • PANW Stock Among Best to Own in September
     • Palo Alto Upgraded to Buy: Here’s Why
2. Fortinet (FTNT): UP 2.6% last week; UP 31.7% in August; UP 31.1% YTD
   • Market Capitalization: $58.7B
   • Most Recent News, Analyses, and Commentary:
     • All You Need to Know About Fortinet Rating Upgrade to Buy
     • Is There Now An Opportunity In Fortinet?
3. CrowdStrike Holdings (CRWD): UP 2.1% last week; UP 19.5% in August; UP 8.6% YTD
   • Market Capitalization: $68.0BMost
   • Recent News, Analyses, and Commentary:
     • Why CrowdStrike Stock Has Moved Higher
     • CrowdStrike rose on earnings, but don’t expect smooth sailing yet
4. Check Point Software Technologies (CHKP): UP 1.2% last week; UP 4.9% in August; UP 26.0% YTD
   • Market Capitalization: $21.7B
   • Most Recent News, Analyses, and Commentary:
     • Check Point Software Technologies is One Of the 3 Best Cybersecurity Stocks to Buy in August
5. Zscaler (ZS): UP 0.3% last week; UP 11.5% in August; DOWN 9.7% YTD
   • Market Capitalization: $30.2B
   • Most Recent News, Analyses, and Commentary:
     • Should You Buy, Sell or Hold Zscaler Stock Before Q4 Earnings?

Summary

On average, the above 5 pure-play cybersecurity software stocks are UP 2.1% last week, UP 14.6% in August, and are UP 16.4% YTD. The constituents have an average market capitalization of $59.2B.

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%.

Thank you for reading the above article. I will update it weekly. Now, as a reward, here is a link to Money, Money, Money—It’s a Rich Man’s World!