In fiscal year 2015, the federal budget is $3.8 trillion.
When you look at a number like that, a $133 million award sounds insignificant.
But the focus of that spending is going to be life-changing for tech investors…
On Sept. 1, Uncle Sam issued this "identity theft insurance" contract to the privately held company ID Experts. It did so to protect the 21.5 million Americans whose personal information was stolen as part of a 2014-2015 cybertheft at the U.S. Office of Personnel Management.
It's all part of a massive cybersecurity push – $14 billion in fiscal 2016 alone – by the nation's leaders to thwart online intrusions at federal agencies and other critical places like banks and brokerages.
Of course, not all of these contracts are going to privately held firms or small, risky cybersecurity specialists.
Today I want to show you how to profit from a defense tech leader that recently opened up a new line in federal cybersecurity – a business that'll be growing at a hefty, steady pace between now and at least 2020.
Most investors don't even realize it's a huge player here…
Billions of Dollars Are On the Table
According to a report from Market Research Media, the federal government will spend $65.5 billion on cybersecurity between 2015 and 2020. And the pace of that spending will grow steadily at about a 6.2% compound annual growth rate (CAGR).
And that spending is borne out by the headlines – hardly a day goes by without a cyberattack on a government agency, corporation, bank, retailer, or university…
Take the hack of the UCLA Health System. In mid-July, hackers exposed the healthcare data of roughly 4.5 million patients.
On March 14, the U.S. State Department said Russian hackers breached its computer network and the agency had to shut it down to remove malicious software. Two weeks later, the state of Indiana had its website hacked and taken down.
That's minor compared with the Feb. 5 news that as many as 80 million customers of Anthem Inc. (NYSE: ANTM), the nation's second-largest health insurance company, may have had their account information stolen. That Anthem data includes employment and income histories, addresses, and Social Security numbers.
A 2014 survey by the Ponemon Institute showed that the average cost of cybercrime for U.S. retailers more than doubled from the year before to an annual average of $8.6 million per company.
Hacks on other sectors proved even more expensive, the Ponemon survey showed. The annual average cost per cyberattack came in at $20.8 million in financial services, $14.5 million in the technology sector, and $12.7 million in communications industry.
No wonder the researchers at MarketsandMarkets say cybersecurity is a global $60 billion industry. The forecasters there expect that number to double just in the next four years alone.
Given the sensitive nature of the data it holds on its computers, the U.S. government spends heavily on cybersecurity. The fiscal 2016 budget that begins Oct. 1 includes $14 billion in spending.
Roughly $5.5 billion of that will protect the Pentagon's computers alone.
This Is a Truly Unstoppable Trend
In the words, cybersecurity clearly meets the mandates of Rule No. 3 of my five-part system for building wealth with tech – "ride the unstoppable trends."
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.