Should Investors Prepare for a Cyber Pandemic?

Investors can prep for a looming cyber pandemic by scooping up promising stocks like Absolute Software Corp. (TSX:ABST)(NASDAQ:ABST).

| More on:
Question marks in a pile

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Late last week, the Colonial Pipeline was hit with a crippling ransomware cyber attack that crippled its operations. The situation was dire, as the pipeline supplies fuel to nearly 50% of the eastern United States. On May 13, the company reportedly paid nearly US$13 million to the hackers in untraceable cryptocurrency. Some investors may have read about the prospects of a cyber pandemic. Today, I want to discuss whether investors should be worried.

What on earth is a cyber pandemic?

The COVID-19 pandemic has led to seismic societal changes, particularly in the workspace. Millions of Canadians have been pushed away from offices and into their homes to carry out their work over the past year. This has accelerated the transformation to solely digital work. Most meetings are now conducted online through Zoom Video and familiarization with email is essential when it comes to communicating in a modern work environment.

These shifts have allowed companies to remain productive during this crisis. However, it is also a hotbed for cyber criminals and saboteurs. A bad actor intruding on a Zoom meeting pales in comparison to the damage that can be wrought by cyber criminals. The potential for an eruption in cyber crime in the wake of this transformation may lead to what some are calling a cyber pandemic.

In early 2020, I’d discussed how Canadians could invest in cyber security. Today, I want to revisit how Canadians can seek exposure to this space as cyber attacks ramp up in terms of scale.

Here’s an ETF to consider for broad exposure to cyber security

Canadians who are seeking broad exposure to the cyber security space may want to consider snagging the Evolve Cyber Security ETF (TSX:CYBR). This exchange-traded fund (ETF) seeks to replicate the performance of the Solactive Global Cyber Security Index Canadian Dollar Hedged. Shares of this ETF have dropped 5.8% in 2021 as of late-morning trading on May 14. However, the ETF is up 39% from the prior year.

Over 75% of the ETF is weighted in United States and Israel-based companies. The latter has emerged into a global leader in this space. Some of the top holdings in this ETF include Fortinet, Palo Alto Networks, Okta, and CrowdStrike. Concerns over a cyber pandemic have led to booming business for these firms. What kind of options do Canadians have on the TSX in this sector?

Two TSX stock to snatch up in this space

Last month, I’d discussed whether BlackBerry (TSX:BB)(NYSE:BB) was the top cyber security stock on the TSX. BlackBerry had a hot start in 2021 but has since faded and flattened. Still, its shares have climbed 19% in 2021. The stock is up 61% from the prior year. Will BlackBerry’s budding cyber security business benefit from a possible cyber pandemic?

The former hardware giant has made promising strides in the cyber security space. In early 2019, it completed a $1.4 billion acquisition of Cylance, and AI-based cyber security firm. Still, BlackBerry has its work cut out for it as the big dogs like Palo Alto, Okta, and CrowdStrike ride ahead of it in this sector. However, I’m still bullish on BlackBerry for the long term.

Absolute Software is a Vancouver-based company that develops, markets, and provides cloud-based endpoint visibility and control platforms for the management and security of computer devices, applications, and data for public and private entities. The stock has climbed 18% so far this year. Its shares have increased 48% compared to the same period in 2020. Absolute is well positioned to gain in a cyber pandemic.

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.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Tom Gardner owns shares of CrowdStrike Holdings, Inc., Okta, and Zoom Video Communications. The Motley Fool owns shares of and recommends CrowdStrike Holdings, Inc., Okta, Palo Alto Networks, and Zoom Video Communications. The Motley Fool recommends BlackBerry, BlackBerry, and Fortinet.

More on Tech Stocks

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

shopping online, e-commerce
Tech Stocks

Shopify (TSX:SHOP) Stock Recovers 30% From its 3-Year Lows: Should You Buy?

Shopify stock: Should you buy the dip or wait for more weakness?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

What Market Correction? 2 High-Growth Tech Stocks That Are on the Rise

I don’t think it will be long before these two Canadian tech stocks are back to delivering market-crushing returns.

Read more »

grow dividends
Tech Stocks

Why Kinaxis (TSX:KXS) Stock Jumped 14% Last Week

Kinaxis Inc. (TSX:KXS) stock popped over the past week after adding yet another big company to its impressive stable.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »