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This $39 Tech Stock Opens a $304 Billion Opportunity

By Michael A. Robinson, Defense + Tech Specialist, Money Morning • @Robinson_STI • May 6, 2021

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Michael A. RobinsonMichael A. Robinson

If it seems like every week you read about a massive new cyberattack executed against the United States, there's a good reason for that.

In fact, once-a-week would be a ludicrous undercount, because in 2018 alone, there were around 30 million attacks launched against U.S. and allied interests - around 560,000 per week. The number has only gone up in the meantime.

This is an undeclared cyber war, and it's global, with countries like China, Russia, Iran, North Korea, and others continually probing for weakness and, just as often as not, they're finding them.

State-sponsored hackers with monikers like Office Monkeys, OceanLotus, the "Guardians of Peace," Ricochet Chollima, Helix Kitten, Sandworm, FIN7, DeputyDog, and Turla have, to one degree or another, breached government- and private-sector networks across the world.

And to be clear, our allies field elite hacking teams or "Tailored Access Units," as do American military, law enforcement, and intelligence communities.

Understandably, not much is on the record when it comes to U.S. or allied cyber-offense capabilities, but when it comes to cyber-defense, authorities can often rely on support and cooperation from the $1.6 trillion private tech sector.

The relationship is mutually beneficial - and investors have to be ahead of what's happening there. U.S. cybersecurity initiatives, you'll see in a minute, often directly contribute to bottom lines across the sector, fueling 10%-plus annual growth in the cybersecurity segment.

I'll name my pick there in a moment, but first, I need to make you aware of a foreign "advanced persistent threat," that could very well be at work in your home or office computer right now...

This Is Public Cyber-Enemy No. 1 Right Now

Security experts agree the most urgent - publicly known - threat to U.S. interests is the Hafnium cyber-espionage group. Microsoft Corp. (NASDAQ: MSFT) has publicly accused China of having ties to these hackers, though for what it's worth, no government body has backed those allegations yet, and the Chinese government has denied it.

E-mail services firm Mimecast Ltd. claims that as many as 61% of companies experienced ransomware attacks in 2020, and almost 80% of organizations were harmed by a lack of cybersecurity preparation.

Little wonder, then, that Hafnium has, essentially, engineered a way to turn our inboxes and calendars against us, using previously unknown vulnerabilities in on-premises (as opposed to the Cloud) Microsoft Exchange Servers. In an attack that's been ongoing since at least January 2021, Hafnium has targeted universities, law firms, policy think tanks, and non-governmental organizations (NGOs).

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Alarmingly, Hafnium has come after infectious disease researchers and defense contractors, directly threatening our pandemic defenses and national security.

The threat is so grave that the FBI and Justice Department have taken some fairly drastic steps recently to stanch the digital bleed-out. Turns out, federal law enforcement has been accessing hundreds of private computers and networks in an effort to defeat Hafnium.

The news had civil libertarians foaming at the mouth, and I have to admit, I was pretty shocked when I learned the feds were accessing computers en masse. But when I drilled right down to it, my worries faded.

The FBI zeroed in on a weakness the hackers themselves created: The bad guys left "backdoors" open so that they could regain access. The Justice Department confirmed that FBI hackers succeeded in accessing the networks through those backdoors and were able to purge the "infection."

Ultimately, law enforcement is working within defined parameters, with oversight, on behalf of U.S. citizens across the board here, not just the thousands of companies and organizations under Hafnium's ongoing digital onslaught.

They're doing the country a favor - investors, too, when you stop and think about it. The fight against Hafnium and other malicious cyber-forces is proving to be a huge profit and growth catalyst.

Cybersecurity Will Be Worth $304 Billion by 2027

Allied Market Research says the field was worth $149.7 billion in the base year of 2019. Growing at roughly 10.5% a year, the cyber sector will be worth $304.9 billion by 2027. The Hafnium attack really crystalizes the opportunity here - and to be sure, there's a long way to go before they're totally stopped.

It certainly reassures me to know that the private and public sector are turning up the heat on the Hafnium crew.

Wall Street apparently doesn't feel the same way. Ironically, cybersecurity stocks are out of favor following a period of see-saw trading.

So, we have the opportunity to pick up the shares I'm going to recommend at a discount, not unlike our Ark Genomic Revolution ETF (BATS: AKRG) play from last month. That's down slightly for the month, by the way, but it gets us cheaper access to a field set to grow 300%.

This investment covers the entire cyber-war front - hardware, software, IT products, and services. It's the iShares Cybersecurity and Tech ETF (NYSEArca: IHAK). This fund, managed by a firm with an enviable track record of beating the market, has traded since June 2019 and has been on an attractive 58.2% run ever since.

The ticker may be tongue-in-cheek, but it's certainly fitting. Besides, IHAK's portfolio is all business.

ProofPoint Inc. (NASDAQ: PFPT): Since 2002, this firm has been a pioneer in e-mail security. Because of the "human factor," e-mail is high up there on any list of weak cybersecurity links in an organization; it can be shockingly easy to dupe people into giving away their logins or other sensitive information. That's where ProofPoint comes in. Anti-phishing remains a core part of the franchise. But with the advent of cloud computing, it has since expanded the business into other fields. It offers a platform that also works to thwart spam, unpredictable e-mail volumes, malware, and other forms of objectionable or dangerous content before they reach the enterprise.

Palo Alto Networks Inc. (NYSE: PANW): This firm offers a suite of security tools used by large organizations worldwide. Palo Alto also provides the full gamut of cyber products. We're talking everything from network-based security hardware and software to AI that scours a company's cloud for signs of hacking. Its Prisma Access platform is used by almost a third of the Fortune 100 companies.

Zscaler Inc. (NASDAQ: ZS): Founded in the Silicon Valley hub of San Jose in 2008, the firm helped pioneer the whole concept of cloud security. The firm is finding rapid adoption for its technology and now supports more than 3,250 clients around the world. In fact, 50% of its sales come from offshore, which provides great geographic diversity in a high-growth field.

CyberArk Software Ltd. (NASDAQ: CYBR) offers a comprehensive, easy-to-deploy privileged access protection software platform. The firm's Cloud Entitlements Manager uses AI to detect and prevent hidden, mistaken, or unused user accounts from being misused for nefarious means. All its findings are displayed in a single, easy-to-grasp dashboard that allows IT security to monitor, add, or remove user accounts and privileges.

Cybersecurity is up there with the most important of the $1.4 trillion "5G Aftershock" trends I've talked about right here; the nationwide deployment of ultra-high-speed Internet communications throws the need for this kind of security into sharp focus, and it could very well throw off potential profit opportunities, with 20 small stocks projected to return up to 1,000% within eight months. (Details on that here.)

Buying just one share each of the companies I've just named would set you back more than $810 at Wednesday's market prices, but IHAK gets you exposure to these firms - and 39 other world-beating cybersecurity firms, some $488 billion in assets under management - for less than $40 right now. And it does all that for a management fee of just 0.47%. I wouldn't expect that price to last, though - the fund has found a technical bottom and appears poised to re-enter an uptrend.

Hafnium is just one of the rogue actors out there - that the public knows of. It's a virtual certainty that, any day now, the next high-profile cyberattack will commence, then the next, then the next... Buy IHAK at market and watch your returns pile high when Wall Street realizes its holdings are absolutely indispensable for the never-ending cyber-fight.

No doubt cybersecurity is a potential high-growth engine for tech investors, but tech is a "big tent" investing discipline, and I think investors would do well to consider everything tech has to offer - cybersecurity, of course, but also robotics, AI, the blockchain, and 5G. In fact, the nationwide 5G rollout has played a part in creating what I call a "5G Aftershock" market that's expected to grow 70% a year - more than double the rate of 5G itself. In my view, the magnitude of this technology's impact could rival the Internet itself - and here you can get the chance to learn about five companies that could profit the most.

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Michael A. RobinsonMichael A. Robinson

About the Author

Browse Michael's articles | View Michael's research services

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.

… Read full bio

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