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Equifax Inc. (NASDAQ: EFX) recently settled with the Federal Trade Commission over its massive 2017 consumer data breach, and it's big.
Just look at the sheer scope of it.
The credit reporting agency agreed to pay up to $700 million to settle claims brought by the FTC and most of the states' attorneys general in a breach that saw more than 147 million people's data exposed. Equifax was even compelled to set up a website that consumers could access to determine whether or not their data was included in the breach.
Consumers affected by the breach have a choice; they can opt for 10 years of free credit monitoring, or they may file claims for anywhere from $125 to a maximum of $20,000.
Those dollar figures have brought some significant media attention, with the majority of stories focusing on how affected consumers can make their choice and file their claim.
But here's the thing: With just $31 million of that $700 million settlement set aside for financial claims, it's at least theoretically possible individual consumers could collect as little as twenty cents ($0.20) each for their trouble.
But I think consumers should get some real, substantial compensation after all the hassles they've been through. In fact, my wife and I were affected ourselves, and for a time, it was a big pain in the neck.
So today, I'm going to set Money Morning Members up much better than Equifax and the FTC ever could...
I'm going to tell you all about a stock that should "compensate" you better and better with each year as the "cyber century" rolls on and the red-hot cybersecurity sector gets hotter...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
The Equifax Breach Was Far from an Isolated Incident
It would be bad enough if consumers had just the one massive breach to contend with. But cybercrime is the black market's ultimate growth industry.
By the time you're finished reading this sentence, a hacker somewhere in the world will have broken into a computer system on Wall Street, for instance, or the Pentagon, or at one or more of thousands of companies around the world.
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I follow this field closely, and even I can't keep up with how busy it's gotten. While many hacks hit small operations and go unreported, we've seen a number of high-profile breaches beyond Equifax.
We're talking companies like eBay Inc. (NASDAQ: EBAY), Yahoo!, and Marriott International Inc. (NASDAQ: MAR). Just since 2014, those three firms and Equifax alone suffered cyber breaches affecting more than 649 million accounts - nearly twice the U.S. population.
Just days ago, news broke of a hack affecting 106 million people after federal agents arrested a former employee of Amazon.com Inc.'s (NASDAQ: AMZN) cloud juggernaut, Amazon Web Services.
She's accused of breaking into the computer network for Capital One Financial Corp. (NYSE: COF). Authorities believe she accessed bank data stored on servers hosted by Amazon.
So now you know why forecasters at Cybersecurity Ventures predict that cybercrime damages will hit $6 trillion annually by 2021. That's double the figure from 2016.
No wonder MarketsandMarkets said sales for the cybersecurity sector last year were worth roughly $137.8 billion. By 2022, that figure will hit $231.9 billion, for a compound annual growth rate of 111%.
That's a mighty attractive backdrop in which to recommend these shares...
This Fund Is Poised for a Strong Rebound... and Then Some
That's why I continue to recommend the ETFMG Prime Cyber Security ETF (NYSEArca: HACK). It holds some 55 stocks that cover the entire sector. Debuting in November 2014, HACK was the first true cybersecurity-focused ETF, and it's poised for a strong rebound for 2019.
With this fund, we get tech and geographic diversity. HACK owns firms that provide hardware, software, and consulting services to defend against cybercrime.
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Of those, roughly 55% cover systems software, while 14% are related to hardware. The rest are in such areas as aerospace and defense, IT services, and application software.
It's definitely focused on U.S. operators. But about 20% are based overseas, in "tech powerhouse" nations like Israel, Japan, and the United Kingdom.
We also get a nice balance of smaller, fast-growing firms that may have choppy action, along with those of larger, more stable leaders.
For instance, HACK holds several firms that cater to big corporations and government agencies. Think old guard members like Cisco Systems Inc. (NASDAQ: CSCO) and Symantec Corp. (NASDAQ: SYMC), which rank as the fund's first and fourth largest holdings, respectively.
But HACK also holds some of the industry's small, more aggressive growth firms. These are companies with breakout technology and huge growth prospects.
Take a look...
Here Are Some of Tomorrow's Cybersecurity Superstars
Proofpoint Inc. (NASDAQ: PFPT): Eric Hahn launched the firm in 2002 with little fanfare. But the former chief technology officer of Netscape (a firm that pioneered the field of web browsers) was really on to something. Proofpoint first focused on email threats and has been steadily branching out over the years to cover so much more. Last March, Proofpoint won 14 gold and silver accolades in the 2019 Cybersecurity Excellence Awards. More than half of all Fortune 1000 firms use one or several of Proofpoint's software tools.
Zix Corp. (NASDAQ: ZIXI) offers one of the best ways to encrypt software applications, particularly including one of the most critical of all - email. This is an emerging sector that Allied Market Research says will grow by 14% a year through 2020, when it will be worth some $2.2 billion. The firm boasts 20,000 clients, including 1,200 hospitals, 30% of U.S. banks, seven divisions of the U.S. Treasury, as well as the U.S. Securities and Exchange Commission. It also protects clients from possible breaches from the mobile phones employees may use at work.
Mimecast Ltd. (NASDAQ: MIME). Although Mimecast is largely flying under Wall Street's radar screen, it already boasts some 15,000 global customers. The "mime" in Mimecast actually underscores the company's main thrust. It stands for "Multi-Purpose Internet Mail Extensions." The upshot: Mimecast helps protect users against phishing scams and other intrusions made through a company's email system that resides in the cloud. It also offers real-time scanning of all web addresses within incoming and archived emails on every click. That shields users from both immediate and delayed attacks.
Palo Alto Networks Inc. (NYSE: PANW) delivers a broad suite of next-gen firewalls and a range of security features for enterprises that need to protect their IT systems and data. The company bills itself as "an enterprise security platform... for all users on any device across any network." And that is really invaluable in today's tech landscape, especially at the enterprise level where companies often encourage their employees to use their own mobile devices, a process that cuts overhead but increases cyber risk.
While it's not immune to the periodic selloffs we've seen in the last couple of years, HACK has a history of beating the broader market.
Since stocks rebounded last Dec. 24, HACK is up nearly 31%. As such, it's beaten the S&P 500 by about 15% during the period.
But it really pays to look at the long-term track record of this sterling ETF. Hack didn't start trading until November 2014.
During that time, it has gained a little more than 60%. By contrast, the S&P 500 has gained 45%. So, HACK has done roughly one-third better since its inception.
With all the cyberattacks in the news and the fund's great selection of leaders in the space, I'm projecting gains of 40% over the next three years.
In other words, HACK is the kind of investment that targets a massive, profitable tech trend. And it offers us outsized gains for many years to come.
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.