What happened

Symantec (NASDAQ:NLOK), CyberArk Software (NASDAQ:CYBR), and Check Point Software (NASDAQ:CHKP) have each seen their stocks soar by approximately 20% since the start of the year, according to data from S&P Global Market Intelligence.

Chart of performance of all three stocks in 2017.

Data source: YCharts.

So what

Cybersecurity stocks have charged out of the gate so far in 2017, with the PureFunds ISE Cyber Security ETF (NYSEMKT:HACK) rising more than 11% year to date. That's probably due to at least in part to a 40% surge in the number of U.S. data breaches in 2016, as reported by the Identity Theft Resource Center and CyberScout, which has led to increased awareness among businesses, government organizations, and individuals regarding the serious threat cyber-attacks pose.

The issue has come to the attention of The Trump administration, which has vowed to strengthen America's cyber-capabilities. "Cyber warfare is an emerging battlefield, and we must take every measure to safeguard our national security secrets and systems," reads a page on the official whitehouse.gov website.

A hooded person with face concealed, sitting at a computer.

Image source: Getty Images.

This heightened level of concern over data breaches is a boon to cybersecurity companies, with Check Point, CyberArk, and Symantec all enjoying rising demand for their services, as evidenced by their most recent quarterly financial results.

Moreover, a wave of deal-making is under way, as cybersecurity companies battle to become the platform of choice for customers who often prefer bundled offerings. In this regard, CyberArk is frequently mentioned as a potential acquisition target, while Check Point and Symantec have the financial strength to acquire smaller rivals. In fact, Check Point is rumored to have engaged in talks to buy CyberArk early last year, although those discussions faded. Symantec, meanwhile, successfully completed two major acquisitions in the past year: enterprise-security company Blue Coat and ID theft-protection specialist LifeLock.

Now what

More industry consolidation is expected, as larger companies such as Symantec and Check Point look to strengthen their platforms with best-in-class technologies, such as CyberArk's top-tier "privileged account" security defenses. This should help to further consolidate market power among the industry leaders, while offering the potential for quick, outsize gains to investors who can identify the companies likely to be acquired at a significant premium.

As such, Symantec, Check Point, and CyberArk each give investors an intriguing way to profit from the booming demand for effective cyber-protection solutions. Therefore, investors may be best served by spreading their capital among all three. Alternatively, for those seeking even more diversification, the PureFunds ISE Cyber Security ETF holds positions in Symantec, Check Point, and CyberArk, as well as 32 other cybersecurity companies, which could make HACK an even better option for investors wishing to profit from the growth of the cybersecurity industry as a whole.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.