Cybersecurity: growing headaches for businesses, growing opportunities for investors
27th January 2022 |
By the time you’ve finished reading this sentence, somebody around the world will have fallen victim to an attack – of the digital kind.
According to Cybersecurity Ventures, on average, a cyber-attack happened every 11 seconds last year.
That means roughly 2,866,909 of them took place over 12 months.
Cyber-attacks are defined as an attempt to gain unauthorised access to a computer network, with the intent to cause harm.
An increasingly digitised and integrated world economy, encouraged by the Covid-19 pandemic, has created a breeding ground for cybercrime, which can have a devastating impact on consumers and businesses.
For example, according to Cyber Security Ventures, cybercrime will cost the world $10.5 trillion annually by 2025.
One of the latest high-profile cyber-attacks involved the humanitarian organisation, the British Red Cross.
The attack, which came on 22 January 2022, compromised sensitive data of around 515,000 vulnerable people, including missing persons and people in detention.
It’s clear that more is needed to be done to defend against cyber-attacks.
The UK is coming up with its own solution.
The UK government has proposed new laws that will help boost the UK’s resilience against cyber-attacks.
Under the proposals, it is seeking to update the Network & Information Systems (NIS) regulations. The NIS regulations came into force in 2018 and provide legal measures to boost the overall level of cybersecurity in the EU.
Notably, the updates include expanding the scope of the NIS regulations. For instance, to third party vendors who manage IT services on behalf of other organisations.
Another is requiring firms to provide more frequent, transparent reporting of cyber-attacks to regulators – i.e.. even those which have a benign impact on business operations.
In all, the proposals should help to boost the UK’s resilience to cyber-attacks and promote better internet hygiene.
The proposals should also spur demand for cybersecurity services.
As such, we believe this boosts the already strong investment cases for Blancco Tech Group (LSE: BLTG) and Corero Network Security (LSE: CNS).
Blancco is a provider of data erasure software. Its technology clears data from devices without a trace being left behind, leaving nothing left for hackers to exploit.
Corero is a provider of distributed denial of service (DDoS) protection. In other words, it helps detect and repel cyber-attacks, without impacting business operations.
In our view, each company has a key role to play in providing the UK with strong and reliable line of cyber defence at a time where cyber-attacks are more prevalent than ever before.
We reiterate our BUY recommendation for Blancco, and our HOLD recommendation for Corero. You can find the respective, original recommendations here and here.
Buy list update
Argo Blockchain (LSE: ARB)
Argo Blockchain is a miner of cryptocurrencies, mainly bitcoin at this stage.
Being a miner of bitcoin, the success of the company is largely tied to the value of bitcoin.
Therefore, the recent sell-off in the crypto market driven by investors’ reduced appetite for risk has had a detrimental impact on Argo’s valuation.
For example, its share price has dropped from 139GBp on 1 December 2021, to 61.79GBp at the time of writing. Over the same period, bitcoin’s price has plummeted from $57,180 to $33,607.
What’s important is that, in our view, Argo’s share price decline isn’t indicative of a structural issue within the company. Rather, as suggested, it’s a by-product of the waning investor risk sentiment currently in the market.
If there is a silver lining to take from this, it’s the fact that Argo’s price has dropped well below our buy limit to a price that looks almost too good to ignore.
Argo’s latest news should also give encouragement.
On 19 January 2022, the company announced it will be starting a non-mining business unit called Argo Labs, alongside its existing mining capabilities.
According to Argo, it will allow it to diversify and capitalise on other business opportunities in the blockchain space. This includes decentralised finance (DeFi), non-fungible tokens (NFTs) and metaverse ecosystems.
Argo has allocated approximately 10% of its own crypto assets to fund Argo Labs.
The announcement is hugely exciting and could establish Argo across a number of exciting yet lucrative areas of the crypto market, rather than just mining.
This could help unlock some of its growth potential which we believe it possesses, regardless of current market headwinds.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here.
New report
Just a heads up that a new report will be uploaded today on the members’ area of the website titled, “Two crypto plays that could leave bitcoin for dust”. This is a report that we’re publishing for new subscribers, but it covers our existing recommendations of IOTA and Mode Global Holdings. Feel free to check the report out, but there’s no urgent information in there you need to know that changes our current position on both those recommendations.
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.
HANetf ETC Group Digital Assets and Blockchain Equity UCITS ETF (LSE: KOIP) – this is an exchange-traded fund (ETF) is an investment fund which tracks the Solactive ETC Group Digital Assets and Blockchain Index, comprised of 30 blockchain-centric stocks. It even includes crypto exchange giant Coinbase (NASDAQ: COIN). The fund is a convenient route into the crypto market that gives exposure to crypto assets that would otherwise be difficult to access. The fund is ever changing, but it includes numerous companies that are pure plays on the growth of the crypto world. You can find the original recommendation here.
EQTEC (LSE: EQT) – EQTEC is a unique, green energy company that is setting the standard for sustainable energy production. Its innovative gasification technology can convert up to 50 feedstocks into sustainable energy sources. It plays a pivotal role in reducing methane emissions from rotting waste at landfill sites. This matters because methane can be up to 86 times more potent than carbon dioxide at trapping heat in the atmosphere. As a result, we believe that the company has a key role to play in helping policymakers achieve stringent emissions targets in the face of COP26. You can find the original recommendation here.
MPAC Group (LSE: MPAC) – MPAC is a leading provider of packaging solutions. The company is helping to deliver efficiency gains to customers through its automated processes that harness some of the most powerful technologies of the modern day. This includes augmented reality (AR) and the use of “smart” machinery. With MPAC, it’s the machines telling the human what to do, rather than the other way round, with the result that human error is eradicated and that manufacturing lines are smoother than ever before. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
