Data breaches and hacks can impact the sensitive information of businesses, organizations and individual people. Cybersecurity helps prevent these cyberattacks, and the demand for cybersecurity is expected to soar in the coming years.
What are cybersecurity stocks?
Cybersecurity stocks include companies that offer cybersecurity consultation for businesses and organizations. It also covers cyber recovery solutions if you’ve been a victim of a cyberattack.
Cybersecurity is the art of defending networks, systems and data from digital attacks. These cyberattacks attempt to access information without authorization. They are designed to steal or destroy data, extort money or for other criminal use.
Why invest in cybersecurity stocks?
Cybercrime costs global economies about $600 billion every year, according to the Center for Strategic and International Studies. That’s an increase from the estimated worldwide losses of $445 billion in 2014 and isn’t predicted to decline.
The rise of cyberattacks has prompted public and private organizations to look for solutions to protect themselves from these dangerous and costly breaches. The global cybersecurity market is predicted to grow from $149 billion to $208 billion by 2023, according to a Cybersecurity Global Market Report.
With the growth of cybercrime, firms and governments will turn to cybersecurity companies for help. And since more than half the world is now online and the demand for cybersecurity is more pressing than ever, it might be a good time to invest in cybersecurity stocks.
Our selection of top picks is based on the same criteria as our annual Stock Trading Platform Awards. This is updated yearly to reflect changes in the market.
"Best for" picks are those we've evaluated to be best for specific product features or categories – you can read our full methodology here. If we show a "Promoted" pick, it's been chosen from among our commercial partners and is based on factors that include special features or offers, and the commission we receive.
This isn't an exhaustive list of all the trading platforms out there. What's best for you depends on your own investing strategy, budget and financial goals.
Risks of investing in cybersecurity
Cybersecurity is a newer industry that got its start with antivirus software and firewalls in the late 80s. Unfortunately, many cybersecurity stocks are based on private companies that are fairly new. And since tech moves fast in the cyber world, smaller, newer companies may struggle to keep up or incur a lot of debt.
Investors may also have trouble gauging winners in the cybersecurity space because the industry is based on hindsight. For example, it is only after a cyber attack that you can definitively evaluate companies and how effective they were in preventing the attack.
The cybersecurity sphere can be volatile as investors and companies are finding their footing.
Cybersecurity stocks
Cybersecurity stocks cover companies that bolster cyber defenses through various services, including hardware and cloud-based software.
Open Text Corp. (TXS:OTEX)
Absolute Software Corp. (TSX:ABST)
BlackBerry Ltd. (TSX:BB.TO)
SailPoint Technologies Holdings, Inc. (NYSE:SAIL)
Palo Alto Networks, Inc. (NYSE:PANW)
Cloudflare, Inc. (NYSE:NET)
What ETFs track the cybersecurity category?
Exchange-traded funds (ETFs) allow you to invest in a spectrum of cybersecurity stocks.
iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK)
ETFMG Prime Cyber Security ETF (NYSEARCA:HACK)
First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR)
Global X Cybersecurity ETF (NASDAQ:BUG)
Evolve Cyber Security Index ETF Hedged (TSX:CYBR.TO)
Are there any cybersecurity ETFs that trade on Canadian stock exchanges?
Evolve Cyber Security Index ETF Hedged trades on the Toronto Stock Exchange, but you’ll have a hard time finding other options in Canada at present. If you want to invest more heavily in cybersecurity stocks, you’ll need to access stock exchanges outside Canada like the NASDAQ or NYSE in the US.
There are several Canadian-based brokerages that offer access to international exchanges on which cybersecurity ETFs trade including Interactive Brokers and Questrade.
Compare trading platforms
Take a look at a few trading platforms to invest in this fast-evolving industry.
1 - 4 of 4
Bottom line
There are risks associated with investing in cybersecurity stocks. But since the demand for these services isn’t going anywhere, cybersecurity might be a profitable long-term investment.
In March, 2019, around one-fifth of the businesses in Canada reported experiencing cyber security incidents. In 2018, Statistics Canada reported that 57% of internet users in Canada experienced cyber security incidents. Police forces in Canada reported around 33,000 cyber violations that same year.
Cyber insurance protects your business if your data is breached. It generally helps recover compromised data, repair computer systems and restore identities of affected users.
Data breaches cost Canada approximately $6.35 million in 2020, and this number is expected to rise. According to a 2018 study by Accenture and the Ponemon Institute, businesses lost just under $4.4 million from disruptions due to cyber security problems and $5.4 million from lost information. Cyber security costs range from fixing breaches, to paying legal penalties, to implementing new protective measures.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
Kimberly Ellis is a personal finance writer at Finder, specializing in banking and financial literacy. After teaching in public and private schools, Kimberly zeroed in on personal financial education to help families and kids develop lifelong money skills. She hails from New York City, graduating summa cum laude from Queens College with a BA in elementary education and mathematics, as well as a New York State teaching certificate. She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick.
A failed SPAC deal pulled the plug on this vertical farming company’s plans to go public. But you can buy stock in other sustainable farming companies.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
