Technology stocks, which are part of many portfolios, have delivered significant returns over the past decade. In the past year, the tech-heavy index posted a return of more than 45%.
As a result of the coronavirus pandemic and global lockdowns, digitization has penetrated many aspects of our lives much faster than previously thought.
Increased reliance on technology and the Internet has also led to a growing market for cybersecurity products. Businesses and individuals alike are willing to spend more to protect themselves from hackers. As technology advances at lightning speed, so are the methods of scammers and criminals online.
The cybersecurity market "was estimated at $ 149.67 billion in 2019 and is expected to reach $ 304.91 billion by 2027, with a CAGR of 9.4% between 2020 and 2027."
According to recent European statistics:
“Up to 88% of UK businesses have experienced breaches in the last 12 months…. That is lower than Germany (92%), France (94%) and Italy (90%). "
US President Joe Biden recently "proposed a $ 9 billion (£ 6.6 billion) funding injection to bolster the US's cybersecurity capabilities & # 39; helping the country's work. being enhanced & # 39; s Cyber ??Security and Information Security Agency (CISA), in addition to a broader security upgrade within the federal government. "
Many investors understandably think of US-listed stocks when mentioning technology stocks. Yet many non-U.S. Tech companies are also seeing a surge in sales and stock price.
Today we take a look at a leading global cybersecurity company, FTSE 100 Member Avast (LON 🙂 (OTC :), a well-known provider of security software. In 2021, AVST's shares are up about 1% so far. On. January 21, it closed at 531p ($ 7.3 for US-resident stocks).
The stock price supports a 2.1% dividend yield and the market capitalization is £ 5.46 billion (or $ 7.49 billion).
In comparison, the index has increased by 2% year-to-date (YTD). Does Avast Deserve Readers' Attention?
How recent revenues came in
Avast started operations in 1988 in the Czech Republic. Today it has approximately 1,700 employees and 20 offices worldwide. It serves more than 435 million customers. The mobile security tools are downloaded by individuals around the world.
In 2018 it went public and joined the UK index. Last year, the company moved up to the FTSE 100, the country's largest stock index.
According to the report released in mid-August, revenues were $ 433.1 million, up 1.5% year-over-year (yoy). Adjusted net income was $ 169.8 million, up 14.6% year-over-year.
CEO, Ondrej Vicek said:
“In the first half, Avast passed the 13 million paying customer milestone, an increase of 640,000. We continue to expand into new markets and expand our reach with new product offerings, such as our innovative privacy solution, BreachGuard…. We expect organic sales growth for FY 2020 should be at the top of the aforementioned middle single digit range. "
At the end of October, Avast released a third quarter trading update with revenues of $ 226.0 million, an increase of 2.6%.
Bottom Line
For those long-term investors looking for UK cybersecurity stocks, I think Avast stocks offer long-term growth potential.
The expected price / earnings ratio and price / earnings ratio of AVST shares are 30.96 and 9.02, respectively. The evaluation measure is on the frothy side. However, given the importance of the industry and the growth it is experiencing, I think a 5% -7% drop in the stock price would improve the margin of safety. Meanwhile, the company could potentially become a takeover target as well.
Readers interested in exchange traded funds with a focus on cybersecurity should read the ETFMG Prime Cyber ??Security ETF (NYSE :), the First Trust NASDAQ Cybersecurity ETF (NASDAQ 🙂 or iShares Cybersecurity and Tech ETF (NYSE :).
Some of the companies that own these funds are Akamai Technologies (NASDAQ :), Check Point Software Technologies (NASDAQ :), Crowdstrike (NASDAQ: ), Okta (NASDAQ :), Palo Alto Networks (NYSE 🙂 and Zscaler (NASDAQ :).
