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Upside Potential With Cybersecurity Stocks

That may change soon, both because of the impact of the massive QE3 program launched by the Federal Reserve and the increasing threats to our national and personal security by cyberterrorists and identity thieves.

A recent article in the Washington Business Journal titled "Washington Leads Nation for Computer Science Jobs" names Man Tech as one of the top 15 computer science companies that are hiring. That certainly indicates a growth in anticipated government contracts (and the article mentions some other interesting possibilities).

At the very least, keep an eye on MANT, whose trading volume on Friday was nearly double its three-month average volume. It appears to be in an accumulation phase, especially by investors who also want reliable dividend income.

The other cybersecurity company I wanted to call to your attention is Symantec (SYMC - Get Report), which weighs in with a $13 billion market cap. SYMC provides security, storage, and systems management solutions to various organizations and consumers worldwide. Shares fell almost 2% on Friday on more than 40% higher than average daily volume.

Although SYMC doesn't pay a dividend, it has total cash of $4.11 billion, operating cash flow of $1.74 billion (TTM) and levered free cash flow of $1.38 billion (TTM). The operating and profit margins are impressive, coming in at 17% each as of June 29.

SYMC owns Norton security products, and when you look at Symantec's eye-opening Web site you may be able to tell why some analysts believe SYMC and its stellar lineup of products and services may be a takeover candidate.

Chief Financial Officer James Beer believes in the company enough to own more than 266,000 shares, as of June 1. More peculiar are the holdings of former CEO Enrique Salem, who was forced out of the company in July. He had declared as of May 12 that he owned nearly 578,000 shares. At Friday's closing price that's worth close to $10,710,300.

Symantec's one-year price per share history and revenue per share (TTM) is reflected in the following chart: SYMC Chart SYMC data by YCharts

These are just two of the companies in the cybersecurity space. In my next article I'll introduce you to at least two others. While there are hackers and cybercriminals in this world, the best of the cybersecurity companies will thrive and prosper.

As of the time of publication the author had no position in any of the companies mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.



Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

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