It’s Time to Bet Big on Cyber Security

by Wall Street Daily
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Submitted by Wall St. Daily using our Trefis Contributor Tool

I can’t guarantee who’s going to win the White House in 2012. Sorry. But I can guarantee you this: Until the election ends, Congress isn’t going to do squat.

How can I be so sure? Well, ironically, at a time when our country needs political action more than ever, we’re stuck with one of the most unproductive Congresses in modern history.

Consider: In 2011, only 90 bills became law. That’s down 65% from the year before. So far this year, only 61 bills have been passed into law – the lowest level in more than 60 years.

Before we can put Americans back to work, we need to get Congress back to work. Stat!

Sadly, bad habits are hard to break, though. And after a five-week recess, lawmakers returned to Washington D.C. on Monday for a two-week session. Yet, as one top Senate aide confirmed to Reuters, “Everyone wants to get out of town – fast.”

Why? Because they’re too preoccupied with campaigning for their respective presidential candidate and/or their own re-election bid.

Like I said, lawmakers aren’t going to accomplish anything before leaving town. The good news is, we can flip the script on Congress and turn their inactivity into profits. Here’s how…

Critical Needs Don’t Wait for Congress

Of all the bills awaiting Congress’ attention after the election, the Cybersecurity Act of 2012 is of utmost importance.

Known as Senate bill 2105, it sets standards for the computer systems that oversee our country’s critical infrastructure. That is, infrastructures “so vital that their incapacity or destruction would have a debilitating impact on the defense or economic security of the United States,” as stated by a 1996 Presidential Executive Order.

Think electrical power grids, natural gas and petroleum pipelines, nuclear power facilities, water treatment plants, railways and highways.

It goes without saying that we should be doing everything in our power to protect such critical infrastructure, right? But we’re not. Even the administration admits it.

President Obama’s counterterrorism adviser, John Brennan, recently said, “Believe me, the critical infrastructure of this country is under threat… [Foreign states and hackers] are developing advanced technologies, and we have to improve our defenses on this issue.”

Of course, “official” comments like these always tend to be more measured. I prefer the straight scoop, which Constantine von Hoffman provided recently on CIO.com’s IT Security Hack blog: “Right now, much of the nation’s critical IT infrastructure is about as secure as an unlocked and unattended candy store surrounded by a pack of wild third graders.”

Comforting, isn’t it?

It’s not like cyber criminals are just sitting idle while Congress gets its act together, either. If anything, they’re getting more aggressive.

For example, the U.S. Defense Department now confronts 10 million cyber attacks each and every day. (That’s up from tens of thousands per day less than a decade ago.) Meanwhile, corporations are under increasing attack, too. And a recent survey found that 49% of security executives admit to being the victim of at least one cyber attack in the last year.

All told, cyber crime costs the world $388 billion per year (and counting). That’s bigger than the global black market in marijuana, cocaine and heroin, combined. As you might suspect, the country with the most extraordinary wealth is also the target of choice. An estimated 23% of all cyber attacks are against our country. That’s nearly three times the amount of the next biggest target, China.

Bottom line: Government agencies and corporations simply can’t afford to wait for Congress to set cyber security standards. They have to act now. Of course, once Congress finally gets off its duff and passes legislation, demand for cyber security services promises to kick into hyperdrive.

The key for us, then, is to position ourselves to profit from both the immediate increase and the inevitable boost from Congress.

Given the enormity of the opportunity, the rising tide should lift all cyber security stocks, including well-known names like Check Point Software Technologies (Nasdaq: CHKP), Sourcefire (Nasdaq: FIRE), Fortinet (Nasdaq: FTNT) and Symantec (Nasdaq: SYMC).

My favorite way to play the imminent boom, though, is with a small-cap, California-based, cyber security company that offers a truly end-to-end solution. It counts more than 50% of the Fortune 100 as customers already. Yet it’s still growing revenue by about 30% per year.

In fact, I’m so bullish on the stock that I just recommended it to WSD Insider subscribers on Monday.

Since it only trades about 70,000 shares per day, though, I can’t share the company with everyone. Otherwise, we’d artificially influence market prices, which we never want to do.

That being said, there’s nothing stopping you from finding out the ticker symbol immediately. All you have to do is sign up for a risk-free trial to WSD Insider here.

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