There's no question 5G will be an unprecedented technological breakthrough. But as more and more of the world's technology is connected, hackers will be preying on the connectivity.
That fear is fuel for one top 5G stock (hint: it's also a cybersecurity stock).
5G is such a powerful technology that it will add $12 trillion to the global economy by 2035. The rollout of the new network will open up unprecedented bandwidth and promises total connectivity across our daily lives.
The 5G network could be 100 times faster than the current 4G network, virtually eliminating wait times for any data transfer. It opens the possibility for everything to be done remotely - from turning on the lights in your home to performing robotic surgery - no matter how far away.
This is not just for scientists and the super-wealthy, either. You likely already know about current field testing in autonomous cars. How about a robot in your kitchen taking inventory of your refrigerator, ordering necessary refills, and sending money from your account to pay for it? 5G will make those possibilities real.
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In the factory, 5G will allow for the crunching of huge sets of data, automating processes and increasing efficiency.
But such a large-scale transformation of our personal and business lives is going to come with a host of new security problems. And that's exactly what's fueling one of our best 5G stock picks right now...
What's Really Driving the 5G Industry
With 5G, the conversation has always followed that a more connected world could enable and increase the potential impacts of cybercrime.
The New Yorker said that 5G has a "terrifying potential." A recent story said, "A totally connected world will also be especially susceptible to cyberattacks." It talks about how hackers have done things such as attack a control center of a municipal dam system, stop an Internet-connected car, and hijack home appliances.
While it may be inconvenient if your connected home won't let you turn on the lights remotely, a hacked autonomous car - or autonomous airplane - has potentially fatal consequences.
That means money will be pouring into cybersecurity companies that can help handle these new threats. It's also why one of our top 5G stocks happens to also be a top cybersecurity stock.
One of Money Morning Defense and Tech Specialist Michael Robinson's favorite plays on the sector is the appropriately named ETFMG Prime Cyber Security ETF (NYSEArca: HACK). As an exchange-traded fund, HACK invests in many individual security stocks, spreading the risk while taking advantage of the flow of money into this sector.
HACK holds 55 stocks from all parts of the sector. It was the first true cybersecurity ETF, and it's now poised for a strong rebound as 2019 winds down.
Shareholders also get tech and geographic diversity. HACK owns firms that provide hardware, software, and consulting services to defend against cybercrime. And 20% of its components are non-U.S. stocks offering exposure to "tech powerhouse" nations such as Israel, Japan, and the UK.
With HACK, you can ride the cybersecurity wave following 5G while watching your risk.
But there is an even better way to get in this burgeoning area.
ETFs are great because they average away single-stock risk. But they also cut the explosive profit potential of the best 5G stocks on that ETF...
How the 5G Industry Feeds This Cybersecurity Stock
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We're looking at a cloud security company called Qualys Inc. (NASDAQ: QLYS).
The cloud is really a network of servers and computers where data and applications are stored for use anywhere in the world. It enables you to travel and always have your work, or personal information, with you and ready to use. You can also collaborate with anyone you allow to view your data. It is also redundant, meaning your data is backed up in more than one place to ensure reliability.
You are probably already using such cloud services as Dropbox, Google Drive, and Apple iCloud.
But with all of your data essentially stored on someone else's network, security is of the utmost importance. After all, if hackers attack, you would be at risk.
Qualys provides security for 11,000 corporate customers in 130 countries, including many on the Forbes Global 100 list.
Specifically, it provides app-based "vulnerability management" solutions, which means its software can identify weaknesses in an information system and inform the proper course of action to eliminate it.
According to CIO.com, 96% of organizations use the cloud in one way or another, and the same trend applies for cybersecurity solutions. The need for cloud-oriented security could not be greater. That's why Qualys' revenue went up 20% last year, jumping from $230.82 million to $278.89 million.
The same is reflected in this company's net income. It almost tripled in the last three years. In 2016, it was $19.2 million, but it grew to $57.3 million by the end of 2018. That's a 198% profit increase.
And this year, Qualys expects to grow even more, with 16% year-over-year revenue growth reported in its Q1 2019 earnings.
Qualys stock has been marking time for much of the past two years, albeit with large swings higher and lower. It traded to the bottom of its range in September but now shows signs of technical strength as it traded at a two-month high.
Right now, the stock trades for $84.38. But it sports a Money Morning Stock VQScore™ of 4.5, meaning it's on the verge of soaring in 2020.
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