The Best Cybersecurity Stock to Buy in 2018

Damages from rising global cybercrime are expected to reach $6 trillion annually by 2021.

And we'll show you the best cybersecurity stock to buy to profit from this unstoppable trend.

You see, to combat cybercrime, spending on cybersecurity is expected to exceed $1 trillion by 2021, according to Cybersecurity Ventures. That's up from $39.5 billion in 2013, an increase of 532% on an annual basis.


While cybercrime effects all companies and governments, the companies that specialize in security stand to benefit the most from this spending surge.

A number of cybersecurity stocks have already delivered investors outstanding returns in 2017.

That's only the beginning...

Companies helping customers mitigate profit-eating cybercrime damages will see huge gains in 2018, as the frequency of cybercrime attacks continues increasing.

But before we reveal our pick, here are more reasons why cybersecurity stocks are set to take off in 2018...

Why the Cybersecurity Sector Is Set to Explode in 2018

In just the first half of 2017, 1.9 billion data records were breached, compared to only 575 million for all of 2013. That's an increase of more than 230%, and those are just the ones we know about.

Some of the major companies that reported data breaches in 2017 include Microsoft Corp. (Nasdaq: MSFT), InterContinental Hotels Group Plc. (NYSE: IHG), The Dun & Bradstreet Corp. (NYSE: DNB), Verizon Communications Inc. (NYSE: VZ), Saks Fifth Avenue, Blue Cross Blue Shield Association, Equifax Inc. (NYSE: EFX), and Uber.

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Equifax's announcement of a massive data breach last year marked one of the largest in this nation's history. More than 143 million Americans had their personal information compromised. Information such as social security numbers, names, dates of birth, and addresses were stolen, opening up those consumers to the chance of becoming victims of identity theft.

Being a victim of identity theft can not only ruin your credit score and financial security, but it can also spell disaster for the company responsible.

According to the Breach Level Index, identity theft accounted for 73% of all data breaches in 2017. That's a 16.67% increase compared to 2016, where identity theft accounted for 62.57% of all data breaches.

If a consumer finds out they've become the victim of a data breach because of a company's weak cybersecurity systems, there's a good chance that they'll lose faith in that company. This makes it even more essential for companies to spend the capital necessary to keep customers' data safe.

There are many excellent cybersecurity firms out there, like Palo Alto Networks Inc. (Nasdaq: PANW), up 10.1% over the last 12 months.

But our pick for the best cybersecurity stock to buy in 2018 is positioned to double in value over the next two years alone...

The Best Cybersecurity Stock to Buy for 2018

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Raytheon Co. (NYSE: RTN) is our pick for the best cybersecurity stock to buy now.

A big reason we're so confident in this company is because its top customer is also the world's largest employer, holding more assets than any other organization or company...

The U.S. government.

Most people already know Raytheon is one of the world's top defense stocks, but it also has a robust cybersecurity division named Forcepoint.

Forcepoint grew its revenue 72.56% between 2015 and 2016, going from $328 million to $566 million. This may be a small slice of the company's $24 billion annual revenue for 2016, but the growth in this division is nearly five times greater than the expected 15% annual growth rate for the broader cybersecurity industry through 2021.

In fact, the U.S. Department of Homeland Security reaffirmed a $1 billion contract with Raytheon last summer. Raytheon will safeguard the data of dozens of federal agencies from data breaches as a result of this deal.


Hitch a Ride to the 'Drone Revolution' with This Stock

Forcepoint is the result of Raytheon bringing together more than a dozen cybersecurity-related businesses and acquisitions, all purchased over the past decade.

On Feb. 8, 2017, Forcepoint acquired Skyfence, which adds cloud security to the company's list of services, which already includes analytics, insider threat, and firewall applications.

And CEO Matt Moynahan plans to do much more with the business. RTN's cybersecurity unit will work on using behavioral analytics to predict threats by understanding actions and intent.

Then, on Dec. 5, Raytheon announced a partnership with Pivotal Software Inc. to assist the Department of Defense in migrating its legacy applications to the cloud. The goal is to improve delivery time, reduce costs, and accelerate the development of secure and effective software solutions.

RTN shares are up 31.71% over the last 12 months, with the stock currently trading at $193.10 per share.

If the company's cybersecurity division continues to increase at a rate of 72% per year, it will be one of RTN's most profitable divisions by 2023 and will justify Raytheon's stock price doubling in value.

RTN has also been aggressively purchasing its own stock, reducing its outstanding shares by 30% over the past 10 years. This has helped its share price soar more 232% over the past five years.

Furthermore, RTN pays an attractive 1.7% dividend yield, paid quarterly. With a rock-bottom dividend payout ratio of 41.5% in 2017, Raytheon has plenty of room to fund its growth and continue increasing its dividend.

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