COVID-19 is already on its second wave. Some businesses need to shut down again to contain the spread. On the investing front, people are looking to companies that can potentially deliver massive growth in the post-pandemic era.
So far, a cybersecurity stock seems to be the best option for frugal investors. If you have $1,000 to invest, you are in line for healthy returns from Absolute Software (TSX:ABT). The growth prospects are fantastic, and the Vancouver, Canada-based company might be an acquisition target soon.
Stellar performance in 2020
The information technology space is the top-performing sector in the S&P/TSX Composite Index as of October 26, 2020. Tech stocks are outperforming the 10 other primary sectors as well as the index. Its year-to-date is 37.93% versus the -5.77% of the TSX.
Absolute Software, however, is turning in a stellar performance. Current investors are winning by 85.33% year-to-date. Had you invested $1,000 on December 31, 2019, your money would have earned $853.29. Since the stock also pays a 1.92% dividend, you get an extra windfall of $35.58. Not bad at all for a double-whammy.
Huge addressable cybersecurity market
Cybercrime activities are ever-increasing in the global digital era. Many companies and organizations are vulnerable. Sectors such as banking, retail, information technology, defence, and manufacturing are under threat. It has become vital to detect fraud and counter cybercriminals.
In 2019, the size of the global cyber security market size was valued at US$156.5 billion. The market is expected to expand at a compound annual growth rate (CAGR) of 10.0% from this year to 2027.
Cybercrime reports were plenty during the pandemic, including the hacking of Canada Revenue Agency (CRA) accounts applying for various emergency benefits. No demographics are exempt from the vicious attacks. As the leader in Endpoint Resilience solutions, Absolute Software should do well in the coming years.
Absolute Software has a long-standing partnership with the top PC original equipment manufacturer (OEM) companies. Among them are Microsoft, HP, Dell, Lenovo, and Panasonic. Mark Grace, Absolute’s SVP for Worldwide OEM, Channel & Business Development, said the company’s Persistence technology is embedded globally in the firmware of over 500 million devices.
The $670.67 million company expects to increase its revenues with the launching of the Absolute Partner Program. This new program will add more tools designed for its global ecosystem of channel partners and resellers. Absolute’s global network of channels will benefit from enhanced resources, training, and support.
Absolute is also playing an essential role in education as K-12 organizations shift to distance learning in the wake of the 2020 pandemic. Schools are likewise vulnerable to cyber-attacks. Absolute President and CEO Christy Wyatt said, “This is an unprecedented time for education, and the student experience is unlikely to stabilize in the foreseeable future.”
Explosive growth on the horizon
Newly appointed CFO Steven Gatoff summed it up when he said, “There is a seismic shift taking place in endpoint security, and Absolute’s Enterprise Resilience approach is truly unique in solving customers’ challenges.” If you want to ride on the momentum and be part of the explosive growth, now is the best time to invest.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and recommends the following options: short January 2021 $115 calls on Microsoft and long January 2021 $85 calls on Microsoft.