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Could These Crime Fighters Be The Next Tech Superstars?
7/31/2013 2:00:00 PM
Just a few days ago, prosecutors in New York issued indictments in what is being described as the biggest computer hacking scheme in U.S. history.
Paul Fishman, the U.S. attorney for New Jersey, was quoted by Bloomberg describing a "worldwide scheme that targeted major corporate networks, stole more than 160 million credit card numbers and resulted in hundreds of millions of dollars in losses."
Some of the companies affected include 7-Eleven, French retailer Carrefour SA (CA.PA) , and Nasdaq OMX Group (Nasdaq: NDAQ) . Eight hundred thousand bank accounts at Citigroup ( C ) and PNC Financial Services Group ( PNC ) were targeted in the attack.
The thieves used stolen account information to withdraw money from ATMs and make credit card purchases. Three of the affected corporations sustained losses of more than $300 million, and the indictment called the losses to individual consumers "immeasurable."
The rise of the Internet over the past two decades has created enormous opportunity for the sharing of information and the creation of wealth around the world. Google, just a startup back in 1998, now boasts a market cap over $294 billion, with revenue of more than $50 billion last year. Tech billionaires like Bill Gates and Mark Zuckerman have become household names.
But this rapid advance in technology has also given birth to a new wave of crime. An estimated 10 million people are victims of identity theft every year. Corporations and governments are forced to spend billions of dollars every year to keep proprietary information safe.
But here's the good news: There are now dozens of companies that specialize in protecting data from thieves, both on the individual and corporate level. As it turns out, this fast-growing niche has made for some great investing opportunities.
Let's take a look at some of the rising stars in this increasingly vital market:
Risks to Consider: The technology sector is a notoriously competitive field, and sustained success within this industry requires consistent innovation and cutting-edge products. Blue-chip giants Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC) are also big players in the field of IT security, and they have billions of dollars at their disposal. Intel bought popular Internet security provider McAfee in 2011.
Action to Take --> Symantec and CA both provide solid investment opportunities for investors at today's prices, with Symantec being the slightly riskier of the two based on its shorter market and dividend history as well as its lack of diversification relative to CA. For more speculative investors, LifeLock has explosive growth potential. Yet this opportunity for big gains should be weighed against the company's short track record and lack of dividend returns.