Today, I want to rewind to two of our conversations from last March and in June because I’ve discovered a hidden connection that could make us a lot of money.
Let’s start with our chat back on March 9 wherein I mentioned that we’re seeing a boom in Internet satellites needed to provide Web access to half the world’s 7 billion people.
Then on [July 1], I revealed one of my favorite plays in the $140 billion cybersecurity market.
These are two major trends taken separately, but together, there’s a problem (and a highly lucrative solution.)
“In space, no one can hear cyber security professionals scream” – That was the verdict from a UK online journal called The Register in their September 2 headline.
For all the wonderous capabilities of our modern communication satellite network, they also present an appealing target to the cybercriminals of today.
Here on Earth, it’s not disaster that I’m predicting. No, instead I can hear cash registers ringing. See, that cyber leader I noted a moment ago is absolutely crushing the market by crushing this problem.
In fact, it’s up 28% since our June cyber talk. That beats the S&P 500 during the period by a stunning 460%.
Today, I want to show why this great company is set up to double its earnings, and its stock price along with it, in as little as 19 months…
The Great Space Hack
As I mentioned a moment ago, it turns out that the thousands of communications satellites orbiting Earth are prime targets for hackers.
As Gina Galasso, managing director of The Aerospace Corporation UK, pointed out to The Register, everyone is focused on the more dramatic threats to our satellite systems like lasers and missiles.
The real problem, Galasso says, comes from more insidious threats. Hackers can do more damage for longer by hacking satellites, corrupting or manipulating the data they relay or even jam them without destroying them.
The vacuum of space offers no protection against threats like these.
The threat here can’t be overstated. For example, almost every car, truck, train, plane, and ship in the world today uses GPS to track its location, keep to a schedule, and avoid obstacles.
We’ve mentioned “ransomware” before at Strategic Tech Investor. To recap, it’s when hostile actors (sometimes associated with foreign governments) hack onto computers, making them unusable unless the victims pay a ransom. In a report released this past May, NASA’s Inspector General found that over the last four years, NASA had been the target of more than 6,000 cyber incidents – with 1,785 of those attempted hacks last year alone.
And that’s just the tip of the iceberg. Almost every company in the world now uses satellite communications, whether they know it or not.
Here at Strategic Tech Investor, I like to make it clear that the best way to play an unstoppable trend is often not the most obvious.
That’s why I’m excited to tell you about the leader in cybersecurity I mentioned earlier. This cyber security company is laser-focused on securing the cloud here on earth.
Enter: Zscaler Inc. (ZS)
It’s a job closely connected to the state of the global satellite network since data in the cloud is constantly being beamed between Earth and satellites in outer space.
That’s why Zscaler Inc.’s (ZS) services are so crucial. The company runs over 150 data centers around the world, which together handle 150 billion transactions per day.
Google does a mere one-tenth that number.
Not only that, Scaler is directly at the forefront of securing the huge satellite communications market.
How Zscaler Works
Zscaler has built out this massive capacity to protect its more than 4,500 clients, which together have more than 20 million employees.
The firm does this by getting rid of the old cybersecurity paradigm where everything “inside” a company’s network was deemed safe, and everything “outside” wasn’t.
In a world where millions work remotely, and corporate IT teams have little control over what an employee has installed on their laptop or smartphone, the assumption that the “inside” was safe is a thing of the past.
It was also an open invitation to any hacker: breach just one app on one device, and you have full access.
So instead, Zscaler works under the assumption that every network is the Internet, and the Internet is not and cannot be made secure. Instead, what must be secured are the signals sent across the Internet, to data centers, applications, and the cloud.
To the Cloud!
This “zero-trust architecture” lets Zscaler protect what matters, without wasting time on what doesn’t. The firm’s software and series of data centers secure communications between apps, people, and clouds, preventing some 7 billion security incidents and security policy violations every day.
This is an absolutely vital service considering the massive role that cloud computing and networked apps play in the modern economy. According to Allied Market Research, the cloud industry will be worth more than $1.5 trillion by 2030.
But in the meantime, Zscaler says its Big Audacious Goal is to “become the strategic business policy and security enforcement platform for 200 million users, 100 million workloads and billions of OT/IoT devices.”
Zscaler’s client roster suggests that goal is well within reach. The company already counts 7 of the top 10 conglomerates, 8 of the top 10 chemical companies, and 5 of the top 10 insurance companies as customers.
And the company’s push zero-trust design also covers the Internet of Things. This hides the IoT devices from the wider Internet, making them accessible only through apps also using the Zscaler system. This lets the company secure communications and devices even when the signals go through an unsecured Internet.
The firm has specifically designed this so that it works no matter how the signals get relayed between data centers, users, and IoT devices – whether that’s fiber, 5G, and even, yes, satellites.
Upside By the Numbers
But Zscaler isn’t just a good story. The cold, hard numbers are great too.
As I noted before, Zscaler has beaten the S&P by an amazing 450% since June 29. This is no one-off.
Over the last two years, the firm’s stock is up 341.5%, beating the S&P by 563%.
The thing is, this innovator is nowhere near done growing. In the most recent quarter, Zscaler’s earnings per share soared 114%, well above its three-year average of 90%.
To be conservative let’s cut that average in half to 45%. At that rate, we’d still see a double in just 19 months. And where earnings go, I expect the stock price to follow right along with it.
Cheers and good investing,
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Source: Strategic Tech Investor