Cyber-attacks – the third most valuable “economy” in the world
28th October 2021 |
Robbers are not just muggers on the streets or cat burglars scaling drainpipes in order to reach the strongboxes of the rich…
According to the Identity Theft Resource Center (ITRC), the number of data breaches publicly reported this year have already exceeded the total for 2020.
That’s with 64 days of the year still left to go.
As of 7 October, the figure stands at 1,291, and is approaching the record of 1,529 that was set in 2017.
By data beaches, we mean the stealing of data by unauthorised third parties, and cloud misconfigurations that lead to data leaking into the public domain.
They both form part of a bigger, malicious trend: cyber-attacks.
In simple terms, a cyber-attack is an attempt to gain unauthorised access to a computer network, with the intent to cause harm.
Cyber-attacks can disable internet networks, and at the same time, lead to sensitive data being exposed to criminals.
Cyber-attacks can have potentially devastating psychological and financial consequences for consumers and businesses.
For example, researcher Cybersecurity Ventures expects global cybercrimes to cost the world $10.5 trillion annually by 2025. If this were an economy in itself, it would be third largest in the world, behind only the United States and China.
An increasingly digitised and integrated world economy is to mainly to blame for the rise in cyber-attacks. The problem has been amplified by pandemic-related changes to work patterns.
One of the latest high-profile cyber-attacks involved UK supermarket chain Tesco.
Between 23 and 24 October 2021, customers were unable to place online orders after interference by hackers.
This has cost Tesco around £15 million in lost sales.
As cyber-attacks boom, the investment opportunity comes from cyber-defence.
Blancco Tech Group (LSE: BLTG) and Corero Network Security (LSE: CNS) are our main cyber-defence plays here at Frontier Tech Investor.
Blancco is a provider of data erasure software. In this, sensitive data is wiped from devices without a trace being left behind. There is nothing left for hackers to access or steal.
Corero is a provider of distributed denial of service (DDoS) protection. In other words, Corero offers software that detects and defends against cyber-attacks without disrupting the functioning of business operations.
Each company provides a high degree of cyber-defence that is essential for the safety, integrity and profitability of its customers.
At the same time, each company allows for compliance with expanding data protection regulations – a feature of the world in which we live.
We reiterate our BUY recommendation on Blancco but do not buy until the stock drops back below its buy limit and our HOLD recommendation on Corero. You can find the respective, original recommendations here and here. See the portfolio for the latest advice.
Buy list update
Rolls-Royce Holdings (LSE: RR)
Rolls-Royce is a specialist engineering company focused on the production of energy and propulsion systems.
On 19 October 2021, the company announced the first successful test flight of its 747 Flying Testbed aircraft using 100% sustainable aviation fuel (SAF) on a Trent 1000 engine, following a collaboration with Boeing and World Energy.
SAF is jet fuel comprised of renewable, plant-based material such as biomass.
The aircraft flew from Tucson airport in Arizona, and headed east towards New Mexico, before arriving back at Tucson airport some four hours later.
A single Trent 1000 engine ran on 100% SAF, whilst the other three RB211 engines ran on standard jet fuel.
It’s a big step from Rolls-Royce, and once more enhances its reputation as a sustainable engineering company that is playing a huge role in decarbonising the aviation industry.
This is where our real interest in Rolls-Royce lies.
With many international governments having green agendas, we believe that its systems and component parts will become valuable to those looking to reach stringent emissions targets.
This is especially true in the United States, where the administration of President Joe Biden is seeking to ramp up the use of SAF.
This endeavour is taking place through a scheme called Sustainable Aviation Fuel Grand Challenge, which is seeking to produce three billion gallons of SAF by 2030.
With Rolls-Royce’s engines being compatible with SAF, it opens another door to potential aircraft customers that are seeking to create more sustainable, fuel-efficient planes.
We reiterate our HOLD recommendation. You can find the original recommendation here. See the portfolio for the latest advice.
Velocys (LSE: VLS)
Velocys is a producer of SAF. Specifically, it uses its very own Fischer-Tropsch catalytic converter to convert woodchip biomass into jet fuel.
Like Rolls-Royce, we believe it has an integral part to play in decarbonising the aviation sector.
For example, its converter can produce fuel with negative carbon emissions.
In other words, fuel consumption means that more carbon emissions are removed from the atmosphere than are produced.
On 19 October 2021, the UK government updated its Net Zero Strategy plans, and has identified sustainable aviation fuels as a way to do this.
As is well documented, the UK government has a target of reaching net zero carbon emissions by 2050.
As such, £180 million of funding has been set aside to support the development of SAF plants in the UK. This includes the Altalto plant in Humberside, whereby Velocys’ SAF technology is already deployed.
Finally, it appears we’re starting to see some government action being taken with respect to cutting carbon emissions.
We think the actions of the UK government will be reciprocated around the world, especially as we move closer to the COP26 Climate Summit Meeting. COP26 (which runs from 30 October to 12 November) could see the implementation of the most stringent emissions targets the world has ever seen.
All this reinforces our positive long-term outlook on the stock.
We reiterate our BUY recommendation but do not buy until the stock drops back below its buy limit. You can find the original recommendation here. See the portfolio for the latest advice.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good, this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Mode Global Holdings (LSE: MODE) – our most recent recommendation, Mode, looks to revolutionise the way in which payments are being conducted. Its platform provides a seamless way to manage and spend assets from both monetary systems; the old, fiat currency system, and the new, crypto and digital assets system. We see the popularity of Mode rising in line with the wider adoption of cryptocurrencies as a means of payment. You can find the original recommendation here.
Argo Blockchain (LSE: ARB) – Argo is a history-making crypto mining company. It is the first pure-play crypto mining company to list on the London Stock Exchange. Its listing on the exchange shows how quickly the transition to the new money system is taking hold. Through its powerful mining rigs, the company has the capability to mine thousands of bitcoin each year, earning potentially lucrative returns in line with the price of bitcoin. You can find the original recommendation here.
Mirriad Advertising (LSE: MIRI) – Mirriad is changing the advertising game. This inventive, and hugely exciting technology company has come up with a unique solution that inserts advertising into content after it has been produced. It provides abundant opportunity for product placement, which it monetises by taking a cut of advertising campaigns. With the company expanding into the most valuable advertising market in the world (the United States) there isn’t a better time to take a position in this stock. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
