McAfee Shows Internet Security Is Hot, Hot, Hot!

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I've got two big-money investing ideas for you today:

1. Start a cloud-based email security service. One of the big boys will buy you out, making you an instant multimillionaire.
2. If that's too hard, just invest in computer security stocks. McAfee (NYSE: MFE) could be a good place to start.

McAfee is a rare beast because the company is growing as if there were no recession. Second-quarter sales got an 18% boost year-over-year to $469 million. Adjusted earnings followed suit with a 15% jump to $0.60 per share. CEO Dave DeWalt is flaunting "continued market share gains" alongside records in sales, profits, and long-term contract revenue.

That kind of performance makes investors sit up and take notice. McAfee's shares have gained 39% over the last year, including a better than 6% boost on the back of this report. Meanwhile, the S&P 500 benchmark dropped 22%, and chief McAfee rival Symantec (Nasdaq: SYMC) suffered to the tune of 28%. If stock performance is any indication -- and I do believe it is -- then McAfee is clearly a best-of-breed investment in the security sector.

A strong earnings report isn't the only fuel in McAfee's rocket boost today, though. The company also announced that it is buying privately held email security specialist MX Logic for $140 million, plus up to $30 million of performance-based incentives later on. MX Logic's software-as-a-service platform puts it solidly in the online cloud, where it competes with some familiar names.

• Postini, arguably the market leader in cloud-based email security, has been part of Google (Nasdaq: GOOG) since 2007, and is tightly integrated into both Google Apps and Gmail. That was a tidy $625 million buyout.
• Symantec bought Messagelabs last year to roll its services into the Symantec Protection Network product line. That was a $695 million deal.
• How about Frontbridge? You may know that security service better as Microsoft (Nasdaq: MSFT) Exchange Hosted Services, as of 2005. Terms of that deal were not disclosed.

McAfee also updated its report on email spam this week, noting that spam volume has more than doubled since March and stands at record levels. Perhaps that trend inspired the MX Logic deal -- email security is hot, hot, hot.

So if you can't make up your mind between McAfee, Blue Coat Systems (Nasdaq: BCSI), and Check Point Software (Nasdaq: CHKP), you could always roll out your own email filtering service and hope for the best. Maybe Oracle (Nasdaq: ORCL) needs another security system?

But most of us should probably just stick with the stocks.

Further highly secure Foolishness:

• 3 Stocks Hitting High Notes
• This Just In: Upgrades and Downgrades
• A Dark Day for the Cloud

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