Blackberry (TSX:BB) and Absolute (TSX:ABT): 2 TSX Cybersecurity Stocks on Investor’s Radar 

Summary

  • Thousands of CRA accounts were compromised in two recent cyberattacks.
  • The incident has once again thrust the cybersecurity space into the spotlight.
  • Blackberry (TSX: BB) and Absolute Software (TSX: ABT) are two stocks operating in the cybersecurity domain.
  • Reports of popular global cybersecurity firm McAfee filing for an initial public offering has also surfaced.

Accounts of thousands of Canadians were compromised in two recent cyberattacks on the Canada Revenue Agency. In the latest incident, the cybercriminals reportedly targeted over 48000 accounts. These acts highlight vulnerability and inadequacy of the high and mighty, including federal digital assets. Following these attacks, the cybersecurity space was once again thrust into the spotlight. As a result, stocks of Blackberry (TSX: BB) and Absolute Software (TSX: ABT) posted good gains over the last couple of months.

Reports of popular global cybersecurity firm McAfee filing for an initial public offering has also emerged.

These circumstances have fueled the hopes of the industry. Increasing reports of cyberattack incidents are surfacing as more employees work from home or use payment getaways. Let us delve into the stock performance of two cybersecurity tech stocks below:

Blackberry Limited (TSX: BB)

Blackberry stocks have seen turbulent times. Once the leaders of the smartphone business, its scrips soared over 14000 per cent in about 11 years – from debut day price of C$ 1.04 (December 14, 1997) to C$ 148 on June 15, 2008. And then came the free fall. In the next decade, the scrips were down nearly 90 per cent.

After exiting the smartphone business, Blackberry zeroed on its security features, becoming leaders in the new world filled with cybercrimes. It posted an impressive turnaround, establishing itself as a leading global cybersecurity firm.

Blackberry stocks have declined by 26 per cent year-to-date due to the pandemic-caused market crash. However, in the last six months, the shares rebounded by nearly 35 per cent. The scrips again plunged by nine per cent in a month. In the last 10 days, the average trading volume for the stock was 2.39 million. Its current market cap is C$ 3.4 billion. As per data on the Toronto Stock Exchange, the stock has a price-to-earnings ratio of 1.33 percent and price-to-cash flow ratio of 38.4.

Blackberry’s revenue surged to US$ 259 million in the second fiscal quarter 2021 (ending August 31, 2020), up from US$ 244 million in the same quarter last year. Net loss narrowed to US$ 23 million in the latest quarter, from US$ 44 million a year ago.

The increase in revenue was driven by BlackBerry QNX tech’s expansion in autonomous vehicle systems and BlackBerry Spark Suites business gains, which included clients like the US Air Force, the Royal Canadian Mint, UK's Ministry of Defence, Rolls Royce and Lloyds Bank.

The scrips are currently trading at C$ 6.17.

Absolute Software Corporation (TSX: ABT)

Absolute stocks have gained nearly 83 per cent this year, riding on the market’s tech stock rally amid the pandemic. In the last six months, this cybersecurity stocks have climbed 76 per cent and up 14 per cent in the last three months. The scrips are trading flat over one-month period.

It has a current market cap of C$ 629 million and currently trading at C$ 16.26. Its price-to-cash flow ratio is 20.4 and has a dividend yield of 2.01 per cent, as per data on the TSX.

In its fiscal 2020 fourth quarter results (ending June 30, 2020), the company posted revenue of US$ 27.2 million, up eight per cent year-over-year. Net income grew nine per cent YoY to US$ 2.2 million. It ended the quarter with US$ 11.6 million cash from operating activities.

Absolute provides endpoint security solutions and data risk management. It distributed C$ 0.08 quarterly dividend.

Cybersecurity Investments

Cyber resilience and defense are of critical importance in today’s juncture. As attackers grow bold amid evolving online transactions (think blockchain, darknet), investment needs to be directed at cyber defense innovation.

But the buck doesn’t stop at cyber resilience.

To uncover the hidden virtual threats and reduce data breaches, more investments should be directed at the cybersecurity space. Investors are likely to fund entities dealing with next-generation firewalls to Security Orchestration Automation and Response (SOAR) and other innovative trends in cybersecurity ecosystem.

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