NEW YORK ( TheStreet) – Corporate CEOs and chief information officers are on high alert, given the endless outpouring of reports about cybercriminal activities. Ironically, these subversive activities should provide a boost to investors' cybersecurity stocks into 2015 and beyond.
"Enterprises need to protect their networks as the stakes have been raised given the recent surge of criminal hacking attacks and malicious activity worldwide," Daniel Ives, a managing director and senior research analyst at FBR Capital Markets & Co., told TheStreet.com. He estimates that the increase in cybercriminal activity is a $15 billion to $20 billion market opportunity worldwide for cybersecurity vendors over the next three years.
"We are in the early innings of this massive cybersecurity opportunity. It’s a game changing paradigm shift as enterprises worldwide adjust to these new security threats," Ives added. "Over the next few years, there’s going to be a massive surge in enterprise and government spending on cybersecurity technologies to detect and prevent malicious activity. These investments will help many of the (security) companies achieve accelerated growth in their sales and profitability in a challenging IT spending environment."
One piece of advice Ives also offered was for investors to take a broader view of security stocks as a core holding and seek those security vendors that will benefit from the escalation of security threats.
Traditional security companies, such as Symantec (SYMC) , Intel's (INTC) subsidiary McAfee, Cisco (CSCO) and Juniper Networks (JNPR) , have more mature technology, which isn’t really focused on the next generation of threats, Ives said. However, Palo Alto Networks (PANW) , FireEye (FEYE) , Proofpoint (PFPT) , Fortinet (FTNT) , and even Checkpoint (CHKP) have done a commendable job expanding their product portfolios to address the latest types of malicious assaults and spy tools, he added.
The increased attacks on networks have been a catalyst for cybersecurity spending by their customers, said Ives. An increasing number of big data analytics are becoming a bigger piece of the security pie, he added, which benefits vendors, such as Palo Alto Networks, Proofpoint, Splunk (SPLK) and Verint (VRNT) .
One of the principal malware spy tools that is in the crosshairs of security analysts is Regin. They are trying to figure out how to stop attackers who insert Regin into computer networks to eavesdrop on enterprise activities and then remotely alter corporate operations.