We’re living in an increasingly connected world. As information systems become more ingrained into our daily activities, these systems are more prone to becoming targets for a would be attacker. Cyber-warfare is not some bad sci-fi dream; it’s a very real threat to any modern society’s way of life.
Governments and private companies realize this and are allocating more resources to prepare for the worst. As technology further develops and the world grasps the magnitude of what a full-on cyber attack could entail, investors should pay more attention to the growth of this trend and the companies providing security solutions.
If you’re wondering where to start your research, consider starting with a large and established defense company. Raytheon (RTN) provides military support systems and currently is increasing its cyber-security presence. RTN earns +10% of its revenues from cyber-security operations. It’s sources of revenue are not only from the U.S. … 20% of sales are from outside the country. Its free cash flow (FCF) is over 10%, which is actually pretty impressive. Such a high percentage of FCF provides RTN the ability to go after smaller comapnies that will either complement their exisiting operations or enable them to rapidly expand into new operational areas. On top of this, the company’s current dividend yeild is 3.5%. (In the last quarter the company increased its dividend distribution by 14.67%.)
Disclosure: No position