Two weeks ago, one company’s computer system went offline… And sent the operations of a multibillion-dollar healthcare giant crashing down.
Change Healthcare is one of the country’s largest prescription medication processors. It handles billing for more than 67,000 pharmacies and has access to patient records for about one-third of all Americans.
On February 21, it suffered a major cyberattack. One that caused big problems for doctors and patients around the country.
Pharmacies couldn’t fill prescriptions. Hospitals couldn’t process claims or check if treatments were covered by insurance.
Now, doctors are facing a cash crunch. They can’t get reimbursed for the drugs and services they provide.
UnitedHealth Group – Change Healthcare’s owner – has started bringing some services back online. But it says the outage might continue for a couple of weeks.
Meanwhile, healthcare providers are losing millions of dollars each day…
Cyberattacks are a growing menace for all companies. This is just one illustration of their destructive power in a mission-critical industry.
And that means it’s equally critical for companies to work on ways to prevent attacks like this in the future.
Today, I’ll show you why spending on cybersecurity is going to keep increasing in the coming years. And I’ll share one way to profit from this trend before it takes off, all while collecting a reliable income.
An Expensive and Growing Pain
Cybercrime is one of the fastest-growing expenses companies face today.
When a hacker breaks into a computer system, they can steal company secrets and millions of customers’ personal data.
And it’s not just data at risk. A cyberattack can have real-world consequences.
In 2021, a cyberattack shut down the Colonial Pipeline for nearly a week. That led to gas shortages across several states.
Last year, hackers got into the computers of MGM Resorts, locking customers out of their rooms and costing the casino $100 million in lost business.
And going back to this latest massive breach, cyberattacks against healthcare targets more than doubled between 2016 and 2021. And they’ve continued increasing.
Last year, hackers took down computer systems at multiple hospitals for nearly a month.
Cybercrime cost American businesses an estimated $320 billion in 2023. That’s a 45% increase over 2022.
And it’s not going to stop there…
Cybercrime will drain an estimated $1.8 trillion out of American pockets by 2028.
This trend is going to continue for decades to come…
That means spending on cybersecurity is also going to increase as companies try to protect their profits.
Helping Fight Cybercrime and Secure Companies
One company that’s at the forefront of the fight against cybercrime is Cisco (CSCO).
Cisco is among the biggest providers of networking hardware. That means a large part of all internet traffic flows through its equipment.
That gives Cisco a unique opportunity to help stop cyberattacks before they happen. And it’s making the right business decisions right now to put itself on the front lines.
Over the past 20 years, Cisco started to fall behind on technology. That’s why the market treats it like a boring “old tech” stock.
But Cisco has recently been buying up several small cybersecurity businesses. It also announced its biggest purchase ever by merging with Splunk – a large cybersecurity firm.
That means the company is evolving from a focus on hardware… to a cybersecurity business that combines hardware and software to help companies stay safe.
Last year, I showed you how Cisco could be following the path of Broadcom (AVGO)… before it shot up 5,000%.
Broadcom used a series of mergers to evolve from a hardware-focused business to a company that sells both hardware and software.
Broadcom cashed in on huge customer demand for mobile devices and cloud computing. And in the process, the market revalued its stock from 13x earnings to nearly 26x earnings.
Shareholders who held on through the company’s transformation earned huge returns, beating the market by 4x in just the past five years.
That’s similar to what I see Cisco doing now. It could become the next Broadcom as it taps into the massive growing demand for cybersecurity.
Right now, it trades for just 13x earnings – like Broadcom did before it took off. So if things take the same route with Cisco, this could be a great opportunity to profit.
And here’s the best part for safe income-focused investors like us…
Cisco also yields 3.3% and is a reliable dividend grower that has increased its payout every year since 2011. So you can get paid to wait while the company tackles the growing cybersecurity market.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily
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Source: Wide Moat Research