It seems hackers are everywhere these days, with the recent infiltration of GoDaddy.com only the most recent example in a series of attacks against businesses, websites, and the government. But within the chaos there is a possible investment: Buy the companies that protect others from hackers. So which cybersecurity companies should you choose? The first that may come to mind is the one many of us have to update every time we turn on a PC: McAfee.
Unfortunately, you can't invest directly in McAfee anymore, as Intel
The beneficiary of these new McAfee products is, of course, Intel. In its most recent earnings report, the company noted that its Software and Services Operating segments, of which McAfee is a part, saw revenue increase from $511 million to $586 million year over year. This $75 million growth came alongside a $28 million boost in operating income, an area in which the company had lost $14 million last year. Intel attributed both instances of improvement to higher revenue from McAfee. Of course, McAfee isn't the only major cybersecurity company.
Before you wreck yourself
The other giant in the space is Symantec
Symantec controls a little over 16% of the North American antivirus market but has less than 10% of the worldwide market. Before the company can increase any sort of international market presence, it needs to get its house in order. At the end of July, Symantec hired Steve Bennett as CEO, a move that shareholders hope will help reverse the company's run of bad luck. The misfortune is evident in the company's most recent earnings report, in which revenue, operating income, earnings, profit margin, and plenty of other financial metrics declined. We'll see whether Symantec is better at stopping hackers than it is at making money.
Last but not least
While McAfee and Symantec are two of the major players in cybersecurity (along with Microsoft, which creates the security software for its own products), let's take a look at a smaller company within the sector. Check Point Software Technologies
Check Point's wide usage by major companies certainly hasn't hurt its bottom line. Last quarter, the company reported a 9% revenue increase, as well as a 20% boost in operating income -- which is why Check Point enjoys an impressive 55% operating margin. But with a P/E of 17.33 (just a bit over the industry average of 16.77), investors may want to wait until Check Point's a bit cheaper to buy in.
As the world becomes more connected via the Internet, cybersecurity will become an even bigger priority -- and that means bigger profits for investors as long as they know the right places to look. We recently highlighted Intel's opportunities in this booming space in our new premium research report on the semiconductor powerhouse. Get started today.
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