4 Cybersecurity Stocks to Buy on Rising Ransomware Attacks
The emerging fields of AI and cloud computing are increasing cybersecurity issues, calling for investments in Microsoft (MSFT), Qualys (QLYS), Radware...
Cybersecurity is now a megatrend as an increasing number of companies are investing in artificial intelligence (AI) and cloud tech during the pandemic. The shift to e-commerce and remote working practices demands huge exposure to AI and cloud computing solutions but also pushes firms to consider cybersecurity risks.
Government and businesses are dealing with a number of sophisticated cyber threats that are disrupting daily work and are difficult to prevent. From wiper malware to firmware and evil AI, ransomware has taken the spotlight and is responsible for several attacks. In recent months, multiple high-profile cyberattacks have made businesses question the security of their networks and infrastructure. Some of them are REvil ransomware attack on Colonial Pipeline, the SolarWinds’ hack, and the cyberattack on the world’s largest meat supplier, JBS.
President Joe Biden has been stressing on strengthening the country’s cybersecurity and on Aug 25, he organized a summit on national cybersecurity, hosting executives from major technology, financial, and energy companies. At the summit, Biden said that “our critical infrastructure is owned and operated by the private sector” and it is difficult for the federal government to meet the challenge alone.
Among the attendees was Microsoft Corporation’s MSFT Satya Nadella who said that the tech giant will invest $20 billion over the next five years to speed up cybersecurity work. Microsoft will also provide $150 million in technical services to help federal, state, and local governments to keep their security systems up to date. Additionally, Google’s parent Alphabet committed $10 billion toward security efforts in an attempt to offer digital-skill certifications to 100,000 American workers. Meanwhile, IBM said it will train 150,000 people in cybersecurity skills.
The challenge at present is that the emerging fields of AI and cloud computing are aiding cybercriminals and hacking groups. AI characteristically can evolve and adapt to situations, hence AI-assisted smarter and autonomous malware can adapt to changing circumstances and learn how to improve tactics to pull off advanced attacks. Researchers have already demonstrated that early-stage AI is significantly better than humans at launching phishing attacks and crafting viral tweets and many companies really don’t have strong firewalls to see what advance evil AI can do. Advancing technologies have cultivated deepfakes that could potentially trigger political crises and incriminate innocent people.
Given the current scenario, going back into the handwritten paper documentation era is not an option. Instead, government and businesses need to strengthen cybersecurity and public-private partnerships to address the ongoing cyberattacks and threats. There is high demand for next-generation security software and per Gartner’s forecast, spending on information security and risk management technology and services may grow 12.4% to reach $150.4 billion in 2021, globally. Per records, at present, cybercrimes, which include damage and destruction of data, stolen money, lost property, intellectual property theft, etc., cost the world almost $600 billion each year. Hence, the adoption of cybersecurity solutions is expected to grow.
4 Cybersecurity Stock Choices
According to a Mordor Intelligence study, the cybersecurity market was valued at $156.24 billion in 2020 and is expected to reach a worth of $352.25 billion by 2026, at a CAGR of 14.5%. The need for security is significantly higher in private financial and banking services, healthcare, and aerospace defense sectors. Hence, we have shortlisted four stocks that are poised to grow.
Qualys, Inc. QLYS provides cloud-based information technology, security, and compliance solutions. In August, this company planned to acquire cloud management platform startup TotalCloud to enhance its cloud security offering and “further strengthen” the Qualys Cloud Platform. The company’s expected earnings growth rate for the current year is 6.3% compared with the Zacks Security industry’s projected earnings growth of 1.8%.
The Zacks Consensus Estimate for this company’s current-year earnings has been revised 11.7% upward over the past 60 days. Qualys flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Microsoft develops, licenses, and supports software, services, devices, and solutions. As mentioned above, the company plans to ramp up cybersecurity and invest $20 billion over the next five years. The company’s expected earnings growth rate for the current year is 8% compared with the Zacks Computer - Software industry’s projected earnings growth of 3.5%.
The Zacks Consensus Estimate for this company’s current-year earnings has been revised 3.6% upward over the past 60 days. Microsoft sports a Zacks Rank #2 (Buy) and has witnessed nearly 35% growth so far this year.
Radware Ltd. RDWR is a Zacks Rank #2 company that develops, manufactures, and markets cyber security and application delivery solutions for applications in physical, virtual, cloud, and software defined data centers. The company’s expected earnings growth rate for the current year is 20.3% compared with the Zacks Security industry’s projected earnings growth of 1.8%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 6.9% upward over the past 60 days. Shares of Radware have moved up 29.2% so far this year.
F5 Networks, Inc. FFIV provides multi-cloud application services for the security, performance, and availability of network applications, servers, and storage systems. This Zacks Rank #2 company’s expected earnings growth rate for the current year is 13.2% against the Zacks Internet - Software industry’s projected earnings decline of 0.9%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 3.5% upward over the past 60 days.
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