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Cybersecurity is a growing issue globally, and demand for threat protection is increasing alongside it. Tech-savvy investors have an opportunity to harness these trends.
Cybersecurity is a growing threat globally, and demand for threat protection is increasing in tandem.
In Australia, the cybersecurity market is projected to grow at a rate of 15.2 percent over the next five years compared to only 2.5 percent growth in the general Australian technology industry.
With many companies shifting to work-from-home models over the last two years due to the COVID-19 pandemic, there's been extra pressure on the cybersecurity sector, making it an industry that should see continued elevated expansion for the foreseeable future. Read on to learn more about the cybersecurity landscape in Australia.
What do cybersecurity companies do?
The cybersecurity stocks category includes companies that offer cyber recovery solutions in the event of an attack, as well as companies that offer consultations on cybersecurity for businesses and organisations.
Cybersecurity companies may also bolster cyber defences through methods like hardware, services and cloud-based software, particularly in software-as-a-service (SaaS) applications.
As a newer industry, most Australian cybersecurity businesses are less than nine years old and are primarily private. Gauging performance can be challenging as company value is based on the aftermath of a cyberattack.
Even so, there are opportunities for potential profit. To give investors an idea of the options, the Investing News Network used TradingView's stock screener to create a list of the top ASX-listed cybersecurity stocks. Companies are listed in order of market cap from largest to smallest, and data was current as of December 20, 2021.
1. Family Zone Cyber Safety
Market cap: AU$393.4 million
Family Zone Cyber Safety (ASX:FZO) offers an app to help control screen time and restrict cyber bullying. Parents can use the app to restrict social media, block inappropriate apps, set up an internet filter and limit in-app purchases.
The company has experienced year-on-year share price growth of about 20 percent so far in 2021, and in August announced the acquisition of UK-based digital school safety company Smoothwall for AU$142 million. The purchase was funded through a AU$146 million capital raise.
Market cap: AU$200.22 million
Tesserent (ASX:TNT) provides a range of internet security services for the education, manufacturing, insurance, legal, finance, logistics and government markets.
The company hangs its hat on its Cyber 360 strategy, which has three components: identifying and assessing threats, risks and protection; taking corrective action; and responding to threats and other incidents.
3. Prophecy International Holdings
Market cap: AU$98.61 million
Prophecy International Holdings (ASX:PRO) is a software company with two products: EMite is a SaaS analytics platform, and Snare is a scalable platform of centralised log management and security analytics products to help customers manage cyber threats in real time. The firm struggled through much of 2020 due to COVID-19.
However, things are looking up for Prophecy, with nearly 90 percent share price growth year-on-year, and new contracts with major businesses like Airbnb (NASDAQ:ABNB) and Johnson & Johnson (NYSE:JNJ).
4. Sovereign Cloud Holdings
Market cap: AU$93.81 million
Sovereign Cloud Holdings (ASX:SOV) and its AUCloud product serve Australian government clients, the Australian Defence Force and Critical National Industry communities. A leading infrastructure-as-a-service company, the company provides cloud-based computing services like Virtual Desktop as a Service.
The Canberra-headquartered company saw an increase to AU$1.1 million revenue in the first half of the 2021 fiscal year, although its share price has been dipping over the past 12 months.
Market cap: AU$53.03 million
Senetas (ASX:SEN) and its subsidiaries provide network data security solutions. Based in South Melbourne, its main customers are governments and businesses all over the world. Since 1999, Senetas has provided products used in cloud services, big data protection and encryption security services.
Market cap: AU$52.39 million
ArchTIS (ASX:AR9) designs and develops secure information-sharing and collaboration infrastructure. It offers Kojensi Cloud Service for organisations to share documents securely, as well as Kojensi Enterprise for collaboration on classified material and Kojensi Field for military and aid workers to collaborate in the field.
Market cap: AU$23.84 million
Launched in 2016, WhiteHawk (ASX:WHK) offers an online tool to small- and medium-sized enterprises to take action against cybercrime. It is one of the first global online cybersecurity marketplaces. The cloud-based platform delivers artificial intelligence solutions through intuitive virtual consults. The company has won multiple US federal government contracts, and is also working with other large entities such as universities.
Market cap: AU$12.84 million
Founded in 2005 as Transaction Solutions International, Vortiv (ASX:VOR) started out as a payments business in India providing ATM and automated bill payment services. Renamed Vortiv, the company has expanded in cybersecurity, acquiring Decipher Works in 2017 and Cloudten Industries in 2019.
Vortiv sold both companies in December 2020, but is continuing its cybersecurity efforts, offering an electronic surveillance system through its stake in TSI India.
Don't forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.
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