News reports have been filled with stories about the return of China’s military backed hackers. That’s clearly bad news, but it could be good news for companies that protect against such threats. Three less-obvious companies that could benefit from this increasing risk are Symantec Corporation (NASDAQ:SYMC), Intel Corporation (NASDAQ:INTC), and Lockheed Martin Corporation (NYSE:LMT).
What’s Been Going Down
In a recent New York Times article, the paper highlights an uptick in cyber-attacks after a brief period of quite. Some of the attacks in the past few years have included taking “aim at companies with access to the nation’s power grid” and hacking a company that “keeps detailed blueprints on more than half the oil and gas pipelines in North America.” Clearly, this is a big threat.
Obvious and not so Obvious
There are companies dedicated to protecting corporations and governments from attacks, including Radware Ltd. (NASDAQ:RDWR), Sourcefire, Inc. (NASDAQ:FIRE), and Fortinet Inc (NASDAQ:FTNT). However, there are some less obvious choices, too. Since the trio above are rather small companies, it may make sense for more conservative investors to look at more diversified options to gain exposure to the cyber protection space.
Protecting the Little Guy
Symantec Corporation (NASDAQ:SYMC) sells Norton Antivirus software. That’s largely a consumer facing product, but in a world where the threat of hacking attacks is front page news, sales are likely to pick up across the board. So, Chinese hacking should help Symantec, too.
The interesting thing about the company, however, is that it is a turnaround play. Previous management used acquisitions as a way to build the company. However, that tactic strained management and dragged down performance. For example, profit margins have fallen from the high twenties and early thirties to the mid-teens.
That’s not a good trend and one that has left the shares trading at what Kevin O’Brien, co-manager of Prospector Opportunity Fund, believes is a healthy discount to its historic P/E multiples. A new CEO and plans to return value to shareholders via dividend payments and stock buybacks, however, suggest improvement on the corporate and stock levels could be in the cards.
The Military
Although the Times suggests that Lockheed Martin Corporation (NYSE:LMT)’s own computer system was hacked, the broadly diversified military contractor has an impressive lineup of cyber war products and services. Indeed, Lockheed Martin Corporation (NYSE:LMT) has been thinking about and dealing with cyber issues for a long time.
Lockheed Martin Corporation (NYSE:LMT) reports that is has been the number one provider of information technology services to the federal government for the last 18 years. It is partnered with the Department of Defense Cyber Crime Center and has a unique Wireless Cyber Security Center that allows for the safe testing of “wireless communications systems in a classified environment.” Sales of such products and services to the military are support enough, but these capabilities are also useful for companies and governments.
