BlackBerry & Absolute Software: Two Tech Stocks With Cybersecurity Exposure

Summary

  • The COVID-19 pandemic has accelerated the growth of cybersecurity firms amid remote working conditions and fast digitalization.
  • Investment directed towards combatting cybercrime is already on a rise and the Canadian government has allocated over C$ 500 million for the same.
  • In 2020, Canada lost an average of C$ 6.34 million through data breach and took 226 days to identify and contain it, says IBM Security.
  • Given current conditions, the bullish momentum is likely to continue in cybersecurity stocks on the TSX in the post-pandemic world.

Canada lost an average of C$ 6.34 million through data breach in 2020 and took 226 days to identify and contain it, reveals 2020 cybersecurity report by IBM Security. Financial sector faced the costliest breaches in this country. Cybercrimes alone costs Canada over C$ 3 billion a year, says standards organization CSA Group. Given the pandemic circumstances and rise of digital crimes in recent times, cybersecurity stocks have become the new bearers of hope for income seeking investors.

Data Breach Costs

At global level, the total average cost of data breaches this year so far is C$ 5.44 million. Of 17 regions surveyed by IBM, the United States suffered the most, followed by Middle East and Canada. The global average time to identify and contain a breach is 280 days. Health care and energy suffered the most on the worldwide scale.

Total average cost of a data breach by country or region, 2020

Source: Data Breach Report 2020, IBM Security

In 2020, the average data breach cost rose by 6.7 per cent year-over-over in Canada. The primary reasons behind this were system glitches (including IT and business process failures), human error, and malicious cyberattacks caused by hackers or inside criminal.

Malicious attacks accounted for 42 percent of the overall loss. However, data breaches caused by system glitches were highest in Canada among the 17 regions surveyed.

COVID & Cybersecurity

The COVID-19 pandemic has forced en masse digital adaptation and remote working conditions for both organizations and employees. Use of cloud applications, video conferencing, SaaS (Software-as-a-Service) and network resources has spiked under the new normal, forcing entities to stare at sophisticated cyber hacks and data breaches.

To solve this, companies need to simplify complexity of current IT and security environments, says IBM. Unified endpoint management and identity and access management can help with deeper security analysis on IoT devices, laptops, desktops, mobiles etc, adds the report.

Investments directed towards combatting cybercrime is already on a rise and the Canadian government has allocated over C$ 500 million for the same.

Cybersecurity Stocks on TSX

The cybersecurity industry is poised for growth in coming months. Amid the recent surge of tech stocks in the pandemic market, companies offering cyber resilience products have been a hit with investors. Analysts expect the bullish momentum to continue with cybersecurity stocks in a post-pandemic world, creating better valuations and generating market-topping returns.

Let’s take a look at two popular cybersecurity firms on the TSX and their recent performance.

Absolute Software Corporation (TSX: ABT)

Absolute stocks have been among the top movers in the pandemic economy, emerging as a key player in the fast-growing cybersecurity segment. The company offers endpoint security and data risk-management solutions. It has 135+ patents under its belt.

Absolute is a small cap firm with a market capitalization of C$ 668 million. It paid shareholders C$ 0.08 quarterly dividend. It has a current P/E ratio of 49.90 percent and dividend yield of 2.041 percent. The shares have gained over 30 percent in a month and yielded 80 percent results this year Absolute shares are currently trading at C$ 15.72.

On the financial front, the company has posted C$ 27.2 million in revenue in the fourth fiscal quarter, up by 7 percent year-over-year.

Absolute has earned the tags of growth stock, value stock and dividend stock in a short span of time. Analysts estimate the stock will keep rallying in coming months given the momentum in cybersecurity industry.

Read: 15 Hot Tech Stocks To Invest Before Summer Ends

BlackBerry Limited (TSX: BB)

This former smartphone darling of the 1990s and early 2000s saw a rapid swing in fortunes with the advent of Android and Apple handsets. After a rollercoaster stock market ride ending with massive scrip devaluation, Blackberry turned its attention to cybersecurity.

During its hardware making days, BlackBerry’s top selling point was its security offerings. Today, the company has capitalized on this and pulled off an impressive turnaround.

BlackBerry has established itself as a leading global cybersecurity firm, boasting of top clientele from auto industry and top commercial banks. Its privacy software is used by all G-7 nations.

Blackberry shares have moved by a little over one percent in the last three months. Its current market cap is over C$ 3.5 billion and has a P/E ratio of 1.413 percent.

In its latest financial results, the firm’s non-GAAP revenue declined to US$ 214 million from US$ 267 million last year. However, recurring non-GAAP software product revenue surged 90 percent year-over-year. On the enterprise front, Blackberry has seen a rising demand from customers seeking security, productivity solutions and business continuity in the homebody economy.

The company did not provide financial guidance for the full year due to uncertainty surrounding the COVID-19 pandemic.

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