Apple Inc. (AAPL), JPMorgan Chase & Co. (JPM): A Spec Play in the Rising Cyber Security Market

Symantec (NASDAQ:SYMC), according to Yahoo! Finance, provides security, storage, and systems management solutions to various organization and consumers worldwide. It operates in four segments: Consumer, Security and Compliance, Storage and Server Management, and Services. The company provides internet security technology for not only corporations, but for the government as well.

According to Forbes, the company has only 10% exposure to public government. This could rapidly expand, however, as the federal government looks to ramp up legislation, and most importantly for internet security firms, spending. As corporations (especially banks and tech companies) look to beef up security, internet security companies should see a rise in revenues. Symantec is a leader in the IT security market.
Fundamentals/valuations:

Ok, so revenue has been increasing along with earnings over the last two years. A falling P/E ratio may signify more potential value, as well. The company is also trading at only around 12-13 times forward earnings. It announced a new capital allocation program in January, that may inject some momentum into the stock going forward.

Symantec also plans to initiate its first ever cash dividend, which probably means things are looking up. The company has also planned a share repurchase program worth over $1 billion. It intends to pay out 50% of free cash flow in dividends and buybacks. The buyback may prop up earnings per share as well. All of these factors, combined with more cyber security spending, may greatly improve the company’s fundamental story going forward.

The company also looks strong financially, with enough cash on hand to pay off its long-term debt and have around $1 billion left over.

The bottom line

Depending on how this whole cyber security issue pans out, Symantec could be one of those who prospers. The company is strong financially, and is starting to open up to shareholders. It is more of a spec play at this point, and it might be wise for investors to keep an eye on earnings for a couple of quarters, along with a watchful eye on the success or failure of the new capital allocation plan before jumping in.

The article A Spec Play in the Rising Cyber Security Market originally appeared on Fool.com by Joseph Harry.

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