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How To Make A Fortune In This "Niche" Market Projected To Grow
408% Faster Than Any Other Industry
Today, there are more than 300 companies jockeying for position across this industry.
But our research and behind-the-scenes intelligence has narrowed the field to 27 companies that have serious potential to dominate the field.
Of those 27 companies, almost half (13) launched their IPOs since October 2006. And 8 have only gone public since August 2010.
In other words... this is a young, dynamic market, and it's exploding with growth.
Based on figures from the Bureau of Economic Analysis (BEA), we project this industry to grow up to 408% faster than any other industry tracked by the BEA for the next 7 years.
This is not a fad. This is a trend on steroids. And it has the potential to make smart investors a ton of money.
Just look at the following chart. It compares an equally weighted index of companies identified by Price Waterhouse Cooper as "pure plays" in this industry vs. the S&P 500.
It shows that from January 1, 2010, to present, the new industry returned 53.13%, compared to the S&P 500, which returned 19.19% over the same time period.
Gains from this emerging industry have already nearly TRIPLED the S&P.
Now look at the chart below. It shows projected growth through 2020 based on figures from the Ponemon Institute and the U.S. Bureau of Economic Analysis.
You can see that this industry is projected to grow 391.6% from now through 2020.
That's up to 408% faster than any industry tracked by the Bureau of Economic Analysis.
And that's with the lion's share of the money going to a select few rocket riders.
It's no wonder the Washington Post recently reported that the government sees a critical need to fill 10,000 jobs in this industry. And that the private sector has at least 40,000 openings.
In the longest period of 8% or more unemployment since the Great Depression, this new industry is already demanding more than 50,000 new jobs... and growing.
Getting in on the ground floor of this kind of growth could generate gains that would make even early investors in oil, cell phones, and computers jealous.
And with good reason. Because this industry has one huge advantage built right into its DNA that virtually no other industry has: It will never become obsolete.
So what industry are we talking about here?
More specifically, the new "Cyber Military Complex" (CMC) that's emerging right now. And that's exactly what it's becoming - a huge industry that envelops the public and private sectors with military-grade technology.
Why The Cyber-Security Niche Is On The Verge Of Explosive Growth
This robust, round-the-clock force deploys weapons and tactics as diverse as the Army is from the Navy... and just as lethal.
And it's not just in the business of protecting anything driven by computers or computer networks. It is engaged in actively attacking those who pose a threat.
And the companies leading this charge will be no less aggressive than the Raytheons, Lockheed Martins, or Northrop Grummans were in their infancy.
So please do NOT confuse CMC with your computer's anti-virus software.
True, Symantec generated 1,550% gains when its anti-virus brand of cyber security propelled it from less than $2 a share to over $30.
But that's a very small segment of the emerging 21st Century Cyber Military Complex.
Today, the "Cyber Military Complex" is on a non-stop growth track, because it's no longer just a matter of convenience. It's a matter of national security... personal security... even life and death.
Stanton Sloane, former chief executive of SRA International put it this way:
"The economic damage from a single wave of cyber attacks on critical infrastructure could exceed $700 billion - or the cumulative toll of 50 major hurricanes ripping into the nation simultaneously."
U.S. Secretary of Defense Leon Panetta likened a cyber attack to America's "next Pearl Harbor."
With every never-ending advance of technology... the level of cyber threats will advance along with it. And that necessitates even more advanced military-grade technology to counter it. In other words, the need for this technology will never become obsolete.
This new Cyber Military Complex is our perpetual last line of defense. And it's here to stay. In fact, it can only get bigger.
Because in the unlikely event that we ever think we've covered every possible threat... there will be hundreds more new ones right around the corner.
As National Intelligence Director, James Clapper perfectly summed up the situation...
"We foresee a cyber-environment in which emerging technologies are developed and implemented before security responses can be put in place."
And everybody has already started spending like mad on it...Defense Department officials are seeking nearly $1 billion more funding in 2012 than first publicly reported.
Federal spending for this industry is projected to reach $10.5 billion - a year - by 2015. That's more than $30 billion over the next three years.
Pike Research estimates that vendors specializing in just one niche of this industry will see revenue jump 208.33% by 2015.
What really has us excited about the way this industry is evolving is this: It's broken up into segments.
The old way of building and servicing an industry is by focusing on one segment. For example, companies that service exclusively banking... or communications... or logistics... or the power grid.
But the new Cyber Military Complex is indifferent to classification. Instead it is function-specific.
Simply put, emerging companies in the CMC have ZERO industry limitations. That means, for example, that a CMC company with expertise in authentication will be able to sell its services to every bank, communications, logistics, or power grid company on the planet.
Within the realm of Cyber Military protection, some players specialize in telecommunications... some specialize in transactions... some specialize in identity protection... some specialize in mobile technology. The list goes on.
The point is, every company that needs cyber security probably needs help in multiple areas. And there's growth opportunity for multiple providers in every potential client.
So today's star providers in CMC are taking their products and services and making inroads across all industry lines to reach virtually every company on earth.
The mobile device market is already enormous. And it's growing exponentially every day.
Since January 2011, Apple has sold more than 144 million iPhones. And Google reports that 850,000 new Android devices are activated every day.
The number of Android devices around the globe totals more than 300 million... with a year-on-year growth rate of more than 250%.
On the software side, Apple boasts over 425,000 apps available for its devices. And the Android market now contains over 200,000 apps.
Guess what? Every one of those devices... and every one of those apps... is an opportunity for cyber crime. And a built-in, never-ending NEED for security.
Not surprisingly, the Georgia Tech Emerging Cyber Threats Report 2012 finds that malware targeting mobile devices constantly evolves, and that the threat against Android and iPhone operating systems is exploding.
But that's only the beginning.
The opportunity for cyber invasion and theft on mobile devices is about to skyrocket... and the need for the security that the new CMC provides is becoming infinitely more desperate. And for two important reasons:
- The Staggering Potential of 7,592% Growth
• Mobile devices have already more than DOUBLED in just two years, from 300 million units in 2010, to 650 million in 2012.
• Add to that the shipments of multi-media tablets like the iPad. IDC reports it expects the number of units sold to almost TRIPLE to 198.1 million units by 2016.
• That is projected to escalate to a staggering 50 BILLION devices by 2020, according to Hans Vestberg, president and CEO of Ericsson. That's roughly seven devices for every person alive on the planet today... and they ALL need protection provided by the new Cyber Military Complex.
- The Electronic Wallet
The use of phones as "mobile wallets" for making all sorts of payments is skyrocketing. Vendors, retailers, merchants, content providers, mobile operators, and banks are all actively establishing new payment services.
This makes mobile devices a giant magnet for theft of cash... savings... property... and identity. Everything and anything your mobile device can access.
Bad guys go where the money is, and with the advancement of mobile technology and smart applications, there is no greater concentration of personal risk on the planet.
The very devices we are rushing into headlong are our Achilles Heel.
• 65% of respondents told the Pew Internet & American Life Project that they think most people will have fully adopted the "mobile wallet" as their day-to-day means of paying in the next eight years.
• The value of mobile payment transactions is projected to virtually QUADRUPLE from $170 billion in 2010 to almost $630 billion by 2014.
• A report released by Edgar, Dunn and Company predicts a growth from 10 million mobile wallets today to more than 1 billion by 2015.
And the risks aren't limited to computers and phones, as evidenced by the hacking last April of Sony Corp.'s (NYSE ADR: SNE) PlayStation Network. The attack exposed the personal information of almost 100 million users and forced Sony to shut down the network.
These growing threats have led major players like Apple Inc. (Nasdaq: AAPL) and International Business Machines Corp. (NYSE: IBM) to beef up their security divisions.
Companies without in-house cybersecurity teams have been on the hunt for a good takeover target to bring such expertise on board.
Intel Corp. (Nasdaq: INTC) about a year ago paid $7.68 billion to buy out McAfee Inc., a leading global supplier of computer security software. Digital-product supplier Imation (NYSE: IMN) last week bought the security hardware business of privately held IronKey Corp.
But a slew of companies are solely focused on computer security, and among them are these five hot profit opportunities.
How To Profit from Cybersecurity Stocks
There are two approaches to take when looking for profits in the computer security industry:
- Focus on companies that specialize in specific data-protection products or online security,
- Or get ahead of the curve by investing in companies that educate and train the aforementioned computer security "geeks," since demand for their graduates can only increase in the years ahead. In addition to revenue and earnings growth, stocks in the first category offer shareholders higher-than-average potential takeover profits.
Three companies to consider include:
- Symantec Corp. (Nasdaq: SYMC), recent price $16.20 - With McAfee folded into Intel, Symantec is probably the largest remaining publicly traded computer security firm, providing data protection to a wide range of clients all over the world. The company offers both direct and online sales, and has combined growth with rapid expansion via acquisitions, the most recent being a June buyout of data-management specialist Clearwell Systems Inc. Symantec earned 92 cents a share in the fiscal year ended April 1, 2011, giving it a price/earnings (P/E) ratio of 18.5. Projected earnings for this year are $1.61 and the average analyst price target is $22.00. Symantec pays no dividend.
- Check Point Software Technologies Ltd. (Nasdaq: CHKP), recent price $52.19 - Israeli-headquartered Check Point specializes in developing custom software and hardware that allows companies to provide secure online financial transactions worldwide, and offers a number of other software products and security services for the global information technology (IT) sector. The company topped off six years of earnings growth with a profit of $2.13 a share in 2010, giving it a P/E ratio of 26.4. The stock pays no dividend.
- Sourcefire Inc. (Nasdaq: FIRE), recent price $27.26 - Sourcefire provides IT security solutions for companies in healthcare, financial services, manufacturing, energy, education, retail and communications sectors worldwide. Revenue of $130.5 million in 2010 almost tripled 2007 numbers. Earnings per share rose to 53 cents from 32 cents in 2009, and analysts estimate earnings of 68 cents a share in 2011. The average projected price target is $29.50; the stock pays no dividend.
Two leaders in the computer technology and security training sectors are:
- SAIC Inc. (NYSE: SAI), recent price $12.01 - San Diego-based SAIC has a handle on government computer security, serving many federal government agencies and branches of the U.S. military, along with state, local and foreign governments. The company earned $1.51 a share on revenue of $11.1 billion in the fiscal year ended Jan. 31, 2011, giving it a P/E ratio of just 7.9. Analysts expect earnings to be flat to slightly higher over the next two years, with a projected price target of $18.00. The stock pays no dividend.
- ManTech International Corp. (Nasdaq: MANT), recent price $30.23 - Far more than just a computer training operation, Virginia-based ManTech is a highly diversified provider of security technologies for government agencies, including the Central Intelligence Agency (CIA), Federal Bureau of Investigation (FBI) and Department of Homeland Security. Operating in about 40 countries worldwide, MANT had $2.6 billion in revenue in 2010, dropping earnings of $3.43 a share to the bottom line, equating to a P/E ratio of 9.0. Earnings are expected to rise to $3.91 in the coming year. The stock has an average projected price target of $47.00, and the 84-cent dividend represents a 2.7% yield.