Spectre and Meltdown Reveal an Opportunity Soon Worth $6 Trillion

2 | By Michael A. Robinson

If you’re reading this on a PC, the odds are very good you’re doing so on an infected computer.

Or one that is in significantly jeopardy of being hacked.

I’m not being an alarmist here. Fact is, the Spectre and Meltdown bugs – flaws recently found in chips made by Intel Corp. (Nasdaq: INTC) – mean that nearly every computer and network server out there are more vulnerable to cyber criminals than we previously thought.

That’s because Intel commands a dominant 81.2% share of the central processing unit (CPU) market. No wonder just about every tech company out there – from Alphabet Inc. (Nasdaq: GOOGL) to Apple Inc. (Nasdaq: AAPL) – has spent the past few weeks working furiously on fixing the problem.

While I’m a big believer in Intel’s long-term future, it’s too late to “buy on the dip” in this case.

But there is a profit opportunity here – a big one.

You see, there’s a huge global challenge – hacks, cyber theft, viruses, malware…

A lot of companies are going to make a lot of money helping us all fight these threats – and so are their investors.

That’s why, today I’ve dug up a great way to profit off this with an investment that beat the market by more than 40% over the last two years.

And that’s going to keep doing the same for years to come.

Take a look…

$6 Trillion in Spending by 2021

Now then, it’s just about impossible to overstate the level of cyber threats we face today.

Just about every electronic device – from your PC and smartphone to your connected car and smart TV – runs on chips. And nearly all of them require software and firmware, meaning there are billions and billions of “hard” targets out there for hackers and cyber thieves.

Not only that, but the online world also is in constant jeopardy. Last July, for example, Equifax Inc. (NYSE: EFX) revealed that a web-based hack at the credit-reporting agency exposed the sensitive data of more than 143 million Americans.

News of that event broke just weeks after we learned of the WannaCry malware attack. That incident infected tens of thousands of companies, hospitals, and government agencies in more than 150 countries.

The forecasters at Cybersecurity Ventures predict that cybercrime damages will hit $6 trillion annually by 2021, double the figure from 2016. And over the next five years, cybersecurity spending will total more than $1 trillion.

No wonder forecasters at MarketsandMarkets say the cybersecurity market will be worth $137.8 billion by the end of this year. By 2022, that figure will hit $231.9 billion, for a compound annual growth rate of 111%.

Make no mistake. Cybercrime is having a dramatic impact on the entire world.

And, therefore, cybersecurity is a target-rich market that’s going to make a lot of companies – and their investors – rich.

Very rich.

Here’s how to join them…

44 Ways to Play It

Some of your investment capital needs to be in cybersecurity.

And the best place to put it right now is in ETFMG Prime Cyber Security ETF (NYSE: HACK).

Debuting in November 2014, HACK is the world’s first cybersecurity-focused exchange-traded fund. It holds 44 companies whose primary business is cybersecurity – 44 firms that offer hardware, software, consulting and services, and all the other tools we all need to defend ourselves against cybercriminals.

Of those, roughly 58% cover systems software and 15% are related to hardware. The rest cover such areas as aerospace and defense, IT services, and application software. Roughly 75% are U.S. firms, with the bulk of the rest based in Israel, the United Kingdom, and Japan.

One of the things I really like about this ETF is that it holds an intriguing mix of small, fast-growing cybersecurity “pure plays” along with larger, more stable global tech leaders – and plenty of companies in between…

From Global Giants to Fast-Moving Penny Stocks

That mirrors the investment philosophy we use at my Nova-X Report premium service – blending Foundational Plays with fast-moving Nova Growth profit opportunities. (To find out more about how to join the tens of thousands of millionaires in the making at Nova-X, just click here.)

For instance, HACK holds several firms that cater to big corporations, nonprofits, and government agencies – the so-called enterprise market. I’m talking about well-known firms like Cisco Systems Inc. (Nasdaq: CSCO) and Symantec Corp. (Nasdaq: SYMC), which rank as the fund’s sixth- and 10th-largest holdings, respectively.

But HACK also holds some of the industry’s smaller, more aggressive, faster growing firms. These are companies with breakout technology – and huge prospects.

However, their stocks are often too volatile to recommend to average retail tech investors. Owning them in a nicely mixed ETF allows us to filter out the turbulence and invest for the long haul while still participating in all that innovation – and share-price gains.

Take a look…

  • Splunk Inc. (Nasdaq: SPLK) ranks as HACK’s fourth-largest holding and is a great backend play on Big Data. The Silicon Valley firm has developed a unique business around protecting all types of machine data created by websites and corporate networks. Unprotected, that data can reveal secrets about such key operations as user behaviors and security risks. Founded in 2003, the company has grown quickly and now has a $12 billion market cap.
  • Qualys Inc. (Nasdaq: QLYS) is the fund’s seventh-largest holding and a great play on cloud computing. The firm’s sensor-centric Cloud Platform provides clients a continuous, always-on assessment of their global security with two-second visibility across all their IT assets. Qualys says it handles more than 1 trillion security actions a year and also maintains 28 billion indexed data points. The system integrates to the major cloud computing providers from Amazon Web Services, Google, and Microsoft Azure.
  • FireEye Inc. (Nasdaq: FEYE) is a hot young cybersecurity superstar. I got to know this firm through my association with Dave DeWalt, who served as the Silicon Valley firm’s CEO from 2012 to 2016. I got to know him when he was running McAfee Co. in the days before Intel acquired that computer security firm for $7.6 billion back in 2010. DeWalt helped build FireEye into a growth juggernaut – which it still is. For example, in the most recent quarter, FireEye grew earnings some 78%. But since debuting on the Nasdaq in September 2013, the stock has remained highly volatile.
  • Science Applications International Corp. (Nasdaq: SAIC) is a trusted government vendor. This also is a company I know well. I once met with its founder, the late J. Robert “Bob” Beyster, to talk about SAIC’s expertise in working with federal agencies. Among its customers are the Pentagon, NASA and the U.S. Department of Homeland Security. Founded in 1969, SAIC has a $2.4 billion market cap and a 39% return on stockholder equity.

All that – plus its $33 price tag and 0.6% expense ratio – makes HACK is a cost-effective way to play the entire global growth market for cybersecurity.

And with just $1.2 billion in assets under management, it’s small enough to offer us plenty of upside…

HACK sold off with the rest of the market back in early February 2016. Since bottoming out that Feb. 10, it has gained some 68%.

That beats the S&P 500 by some 40.5% during that stretch.

With all the cyberattacks in the news and the fund’s great selection of leaders in the space, I believe we’ll see the same kind of returns over the next few years.

So, HACK gives us a great diversified play on a very hot trend with one that should continue to crush the overall market for years to come.

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