Cybersecurity stocks have been consolidating in the last 18 months. As usual, investors give up after such a long time, given amazing strength in other tech sectors like social media, cloud computing, and, until recently, blockchain stocks. As it always goes once most investors have left the arena a new leg higher starts which is what is happening now in cybersecurity. We identified 4 cybersecurity stocks which are worth considering to buy in 2018.
Why cybersecurity matters
Cybercrime is the dreaded next generation crime that is done electronically via computer, internet and network. It is considered elusive because of its difficult to apprehend the mastermind. By the time it is discovered, some kind of losses – especially in the monetary form would have happened.
As far as protecting company’s data is concern nothing beats the wisdom “better safe than sorry”. As business gets very competitive and tougher, any first-hand information about potential customers and competitors can mean securing crucial deals with better propositions. So, the issue of data management is crutial for your business just as proper marketing is important for sales (check out these marketing solutions). Although globalization and internet bring about greater business connectivity internationally it also implies that companies are more susceptible to data theft. This is why you would need a third-party security expert, a CISO as a Service, whose task is to build and maintain efficient cybersecurity program that will keep sensitive data under lock and key. Various ways of stealing company data includes hacking, skimming, phishing emails and etc. This is exactly why you would need to protect your business with insurance policies against various cyber threats. Learn more about Hightower Risk and its exclusive offering.
Company data that are hacked such as pricing, business proposals, intellectual properties and, if not the most important piece, customer data (privacy) could result in substantial losses that ultimately ruin the profitability. In the year 2017 alone the damage due to ransomware was estimated to exceed 5 billion dollars. The process of engaging cybersecurity companies to install anti-virus, encryption, secure remote access and firewall will be costly but not as costly compared to company data loss. With more companies including small and medium enterprises allocating money to have this preventive measure, we are confident that cybersecurity industry could do well.
4 cybersecurity stocks a potential “buy” in 2018
The method of InvestingHaven’s research team is the top/down approach: we always (always) start by looking into a sector ETF before screening individual stocks.
Weekly chart of HACK
Since the inception of trading in Dec 2014, the world’s first cyber security ETF – HACK is designed to reflect the performance of companies involved in the cybersecurity industry, including companies that provide cybersecurity related hardware/software and services. The above weekly chart of HACK shows that price was basing for about 3 years before convincingly breaking above previous resistance. This more or less confirms the new stage of bull market in cybersecurity companies which visibly has started in 2018.
Cybersecurity stock #1 for 2018: FireEye, Inc. (Nasdaq: FEYE)
Fireeye, Inc. is a publicly listed enterprise cybersecurity company that provides products and services to protect against advanced cyber threats, such as advanced persistent threats and spear phishing. Founded in 2004, the company is headquartered in Milpitas, California.
Weekly chart of FEYE
The weekly chart of FireEye has a persistent bearish structure along the downtrend channel since the top in March 2014. It is only in Jan 2016 that price engaged in a 2 year long rounding bottom consolidation that led to the break of downtrend channel. If price can break above ~19, the next higher target will be ~25 follow by ~32. However, if the break out attempt fails and price reverses, the next immediate target is ~16.2. Breaking below 13.5 will revert the positive outlook into negative one.
Cybersecurity stock #2 for 2018: VeriSign, Inc. (Nasdaq: VRSN)
VeriSign incorporated on April 12, 1995. It is a provider of domain name registry services and Internet security, enabling Internet navigation for various domain names and providing protection for Websites and enterprises around the world. The Company operates through Registry Services and Security Services segment. Registry Services ensure the security, stability and resiliency of Internet infrastructure and services, including the .com and .net domains, and operation of the root-zone maintainer functions for the core of the Internet’s Domain Name System (DNS). Security Services provides infrastructure assurance services consisting of Distributed Denial of Services (DDoS) Protection Services and Managed DNS Services
Monthly chart of VRSN
At the time or writing the price of Verisign has made an initial big move and the next immediate target will be ~138. Whether or not price has the power to break through we cannot guarantee. From an investment point of view, as long as the company is producing solid fundamental with excellent security verification business, ultimately price is going to challenge the dotcom collapse price of between 206-259.
Like it or not, cybercrime is here to stay. As advanced hackers have demonstrated their ability to shut down energy infrastructure, weapons defence systems, and financial markets, the cyber security industry will continue to grow, offering governments and corporation protection against massive financial loss, personal particular and confidential data.
That’s why some cybersecurity stocks are worth a “buy” as long as the tech sector (top/down) approach shows strength.
Cybersecurity stock #3 for 2018: Radware (Nasdaq: RDWR)
Radware Ltd. develops, manufactures and markets application delivery and network security solutions that provide end-to-end availability, performance and security of mission critical networked applications to data centers.
Monthly chart of Radware
Price of Radware can be described as a mixture of ballistic and hard landing price movement since the collapse of dotcom bubble in the year 2000. Twice bottoming at 2002 and 2009 respectively. Entire price obeys the wide downtrend channel but things look to be about to change. With the strong fundamentals price can break out hard above the downtrend channel resistance. On the bullish side, we expect price to test 27.2 upon breaking above and subsequently consolidate and attempt to challenge 2000 resistance of 35.6 – 43.5. However, should this breakout attempt fail, and get rejected, it could spill into a potential right shoulder pattern with crucial support of ~18.5 followed by 13.8. Breaking below 10.3 confirmed the resumption of downtrend.
Cybersecurity stock #4 for 2018: F5 Networks, Inc (Nasdaq: FFIV)
F5 Networks, Inc. specializes in application delivery networking (ADN) technology for the delivery of web applications and the security, performance, availability of servers, data storage devices, and other network and cloud resources. F5 is headquartered in Seattle, Washington, and has other development, manufacturing, and sales/marketing offices worldwide.
Known originally for its load balancing product, to date F5’s products and services line has expanded into all things related to the delivery of applications, including local load balancing and acceleration, global (DNS based) load balancing and acceleration, security through web application firewall and application authentication and access products, DDoS defense, and more. F5 technologies are available in the data center and the cloud, including private, public, and multi-cloud environments based on platforms such as AWS, Microsoft Azure, Google Cloud, and OpenStack.
Monthly chart of FFIV
The chart of FFIV looks erratic though a closer look says it all. Price plunged from year 2000, and it had a tough 10 years of recovery before breaking above 75 in July 2010. From then on, another rectangular consolidation phase of 8 years and now look poised for yet another major break out above 150. Once this stock breaks out successfully, the next target will probably be ~200 follow by 300 in next 1-2 years. In case of heavy rejection price will fall into the consolidation zone again. Breaking below 70-75 zone will be bearish.
Like it or not, cybercrime is here to stay and continue to post problems, in 2018 and way beyond. As advanced hackers have demonstrated their ability to shut down energy infrastructure, weapons defence systems, and financial markets, the cybersecurity industry will continue to grow, offering governments and corporation protection against massive financial loss, personal particular and confidential data.
Trade wisely according to your profile, and consult your financial adviser if you want to invest. This serve only as educational purpose with no call on buy/sell recommendation.