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Some of the biggest companies in America have been the victims of cyber terrorism lately. Now they’re paying millions to ensure it never happens again.
Fear can be paralyzing.
Fear can cause a scuba diver to freeze if he sees a shark, cause a turtle to go into its shell, cause a stage actor to suddenly forget his lines. It can have the same effect on investors.
When stocks plummet, as they have in the last few weeks, it’s tempting to curl up into a fetal position and hope that your portfolio survives the storm. That’s the quickest way to lose your shirt. It’s more profitable to be proactive and get out ahead of all the fear.
The same is true of investing in the cyber security sector.
If you’ve paid attention to the news lately, you know how serious a threat cyber attacks have become. Consider these recent events:
December 2013: Target confirmed a data breach that involved credit and debit cards used at America’s second-largest retailer’s stores over the span of three weeks. As a result of the breach, 40 million customer cards were hacked, the cyber-criminals capturing their PIN data as customers were typing in their codes after swiping their debit cards. That allows the hackers to obtain personal information including names, phone numbers and e-mail addresses.
January 2014: Neiman Marcus says cyber-criminals stole card information from 1.1 million of its customers over a three-and-a-half-month span. About 2,400 of those cards were later used fraudulently.
January 2014: Michael’s, America’s largest crafts chain, reports “possible fraudulent activity” on some of its customers’ payment cards.
February 2014: Hotel management firm White Lodging reports a breach at 14 hotels it manages, including the Marriott, Radisson, Sheraton, Westin and Holiday Inn.
September 2014: Naked photos of celebrities such as Jennifer Lawrence, Kate Upton and Justin Verlander surface on the Internet after hackers stole them straight from their personal iPhone accounts. No one lost any money or had their bank accounts compromised. But the personal nature of the hack, and the high-profile people involved, shed a glowing spotlight on cyber attacks.
September 2014: Home Depot confirms that an estimated 56 million credit and debit cards are at risk after malware hackers stole customer information without detection for five months. A credit monitoring service estimates that the fraud losses could reach $3 billion.
The list goes on and on, with JPMorgan Chase, the nation’s biggest bank by assets, announcing in October that last summer a huge cyber attack compromised customer information from 76 million households.
Is your money safe?
How about your city’s power grid?
The government’s databases?
We’ve just seen the tip of the iceberg.
In 2013 hackers with the approval of Iran’s government hacked into the U.S. Navy’s computers. Hackers in China have breached security systems in Boeing and Lockheed Martin in attempts to steal our most tightly held defense secrets. And worst of all, in Russia – the epicenter of cyber terrorism – hackers infiltrated 420,000 different websites and stole 1.2 billion user name and password combinations.
The next incident could be the work of cyber terrorists attempting to compromise our entire way of life. If that doesn’t send shivers of fear down your spine, what will?
But don’t let that fear cripple you. There are a handful of great companies working on the front lines of cyber security. They not only will protect us from cyber terrorism threats; they present a way to profit from this new world order as well.
They are the publicly traded companies that guard against identity theft, protect power grids, and secure the websites of Fortune 500 companies and government agencies.
Never have cyber security companies been more essential. We need those companies to protect our bank accounts, credit cards and personal information. Increasingly, we also need these companies in our portfolios.
Cyber security is the next big growth trend. Sixteen million Americans were the victims of identity theft last year, totaling losses of more than $24.7 billion. Big corporations are willing to shell out big bucks to protect against those types of financial losses – and avoid the kind of embarrassment that has plagued Target and Home Depot in recent months. JPMorgan Chase alone estimates that it will spend $250 million annually on cyber security by the end of the year, employing 1,000 people to protect customers’ assets. This kind of spending will go to the companies that can offer the right protection.
We want exposure to those companies. As such, we have launched a new report: Profiting from Cold War 2.0: Best of Breed ‘Digital Defense Contractors’ for Your Portfolio. The report identifies five cyber security stocks poised to make huge profits in the years to come. Click here to find out what they are.
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