The FBI is on the move, accessing hundreds of private computers and related networks. The idea might make civil libertarians foam at the mouth, but they’re doing the country a favor that it seriously needs.
That’s because this move is a crucial step towards stopping the threat of a vicious new hack dubbed Hafnium.
Hafnium is bedeviling thousands of companies throughout the US. This is the latest in a string of hacks pushing the value of the cybersecurity market to $304 billion by 2027.
In fact, the email services firm Mimecast Ltd. claims that as many as 61% of companies experienced ransomware attacks in 2020, and almost 80% of organizations were harmed by a lack of cybersecurity preparation.
With that in mind, today I want to let you in on a relatively new cyber investment that is perfectly positioned to cash in on this rising industry…
The Digital Arena
Now then, like a lot of you, at first, I was pretty disturbed to learn the FBI was accessing computers en masse.
But after I drilled down and read the details, two things jumped out at me.
First, the agency really is working on behalf of US citizens across the board. Second and more to the point, there’s plenty of money to be made investing in cybersecurity.
Allied Market Research says the field was worth $149.7 billion in the base year of 2019. Growing at roughly 10.5% a year, the cyber sector will be worth $304.9 billion by 2027.
I believe you couldn’t find a better or fresher example of why this is such a fertile field than the recent Hafnium attack.
Hackers linked to China are believed to have exploited thousands of Microsoft Exchange Server customers around the world, with many of them based in the US.
For its part, the FBI has honed in on a weakness the hackers themselves created. They left backdoors open so that they could regain access.
But the sharp folks at the FBI turned that to their advantage in a move since confirmed by the US Justice Dept. FBI hackers succeeded in gaining access to networks through Web backdoors and deleted the code behind the hack.
There’s still a long way to go in stopping Hafnium’s spread. But it’s comforting to know the business community and federal government are turning up the heat on the Hafnium crew.
United Defense
To be fair, the Justice Department did get court approval to carry out the operation. It does not require the knowledge or approval of computer owners, many of whom may not even know they’ve been hacked in the first place.
Ironically, the cybersecurity field is currently out of favor on Wall Street following a period of see-saw trading.
And that sets up it to profit with an investment vehicle that covers the entire cyber waterfront.
Debuting in June 2019, the iShares Cybersecurity and Tech ETF (IHAK) comes from an investment firm with a track record of beating the market over the long haul.
IHAK is focused on cyber and related technology that includes hardware, software, IT products, and services. Take a look at some of its top holdings:
- ProofPoint Inc. (PFPT). Launching in 2002, the firm emerged as a pioneer in email security. Anti-phishing remains a core part of the franchise. But with the advent of cloud computing, it has since expanded the business into other fields. It offers a platform that also works to thwart spam, unpredictable email volumes, malware, and other forms of objectionable or dangerous content before they reach the enterprise.
- Palo Alto Networks Inc. (PANW). This firm offers a suite of security tools used by large organizations. Palo Alto also provides the full gamut of cyber products. We’re talking everything from network-based security hardware and software to AI that scours a company’s cloud for signs of hacking. Its Prisma Access platform is used by almost a third of the Fortune 100 companies.
- Zscaler Inc. (Nasdaq: ZS). Founded in the Silicon Valley city of San Jose in 2008, the firm helped pioneer the whole concept of cloud security. The firm is finding rapid adoption for its technology. It now supports more than 3,250 clients around the world. In fact, 50% of its sales come from offshore, which provides great geographic diversity in a high growth field.
- CyberArk Software Ltd. (CYBR) offers a comprehensive, easy-to-deploy privileged access protection software platform. The firm’s Cloud Entitlements Manager uses AI to detect and prevent hidden, mistaken, or unused user accounts from being misused for nefarious means. All its findings are displayed in a single, easy-to-grasp dashboard that allows IT security to monitor, add, or remove user accounts and privileges.
With the power and importance of digital networks about to skyrocket with the continuing rollout of 5G wireless technology, these leaders in network security will be more important than ever.
And they are going to go on to clear the way for another entire wave of profit opportunities as all of the companies that rely on network technology reap the benefits of faster and better connections.
Growth by The Numbers
Charging a management fee of a mere 0.47%, IHAK trades at around $42.50, a fraction of what some of the stocks in its portfolio cost.
IHAK has roughly $488 billion in assets under management. Yes, the fund sold off with the rest of the sector back in early February. But it has turned the corner and reentered into an uptrend.
Since launching in June 2019, it’s up 63.6%. Over the same period, the benchmark S&P 500 gained 42.3%.
That means this relatively new fund beat the broad market during the period by 50.3%.
With all the cyberattacks in the news and the fund’s great selection of market leaders, I think we can see the same kind of returns over the next couple of years.
So, IHAK gives us a great diversified play on a growth market that will help build your net worth for many years to come.
Cheers and good investing,
Michael A. Robinson
Source: Strategic Tech Investor