Before the arrival of the "cloud," cybersecurity used to be relatively simple.
A simple firewall to secure the network... some antivirus software to keep PCs in the office safe from various forms of malware... and that was about it.
The benefits of the cloud are clear (efficiency, mobility, and cost savings, just to name a few). Still, no company wants to be in the headlines for a costly security breach.
This means any critical applications and business-critical data stored on the cloud will require security controls not covered by security measures designed purely for on-premises deployments.
That means big-time opportunity for companies offering innovative solutions in the cybersecurity space.
One Of Our Top Cyber Picks
One particular area that's ripe for cyber companies is with what are known as "privileged accounts." These special accounts are what the IT folks at any business use to log in to a system or make administrative changes to the many accounts they manage.
And as such, they are often the point of attack for any hacker. A cyber attack on unprotected and unmanaged privileged accounts can lead to costly service disruptions, high-value data loss and pricey remediation jobs.
That's where a company like CyberArk Software (Nasdaq: CYBR) comes in.
The company is a provider of services that protect privileged accounts inside the firewall. And in this regard, it really shines.
The company uses big data analytics to quickly detect potential threats to core assets coming from hackers who were able to get inside the network as well as from rogue insiders. Its applications are proactive in that they limit lateral movement if the perimeter has been breached in order to diffuse the attack damage.
CyberArk has more than 4,450 customers, up from 3075 customers at the end of 2016. The company does most of its business in the Americas region (representing more than 60% of total revenue) but has been building up its presence across Europe and Asia.
CyberArk offers a full suite of privileged account security (PAS) products. One of the company's core offerings, Enterprise Password Vault, enables customers to secure, manage and track the use of privileged credentials (both on-premises and in the cloud) across operating systems, databases, applications, hypervisors and network devices.
Privileged Threat Analytics (PTA) has emerged as another key offering. The service is designed to identify an attack in real-time and automatically respond to stop the attacker from continuing to push forward into the entire network.
PTA's self-learning analytics engine runs a combination of proprietary algorithms (including behavior-based) on users, entities and network traffic to detect indications of a compromise early in the attack lifecycle. The early warning can make a big difference in terms of preventing small breaches from turning into major ones.
Action To Take
There are a lot of choices for investors in the cybersecurity space -- and CyberArk is just one of them.
What makes CyberArk a top consideration is its strong balance sheet and growth record. The company has no debt obligations, ample liquidity, strong cash flow, and nearly $500 million in cash on hand at last count -- which, since it has no long-term debt, the company can use for strategic acquisitions and other shareholder-benefitting initiatives.
Yes, the stock may be richly valued on a price-to-earnings basis, but there is a lot of growth potential here... CyberArk itself is growing rapidly, but the industry itself is also growing. The industry is also fragmented -- and at a $3 billion market cap, it could look attractive to a larger rival.