3 Security Stocks Benefiting from Hack Attacks

NEW YORK (TheStreet) -- Hacker group Anonymous continued to wreak havoc this weekend, claiming it had taken down the CIA Web site and Alabama state sites.

Earlier this month Anonymous also attacked Brazilian bank Web sites including Citigroup (C) and Banco de Brasil.

These recent attacks have raised awareness about the need for companies to strengthen their cyber defense systems.

There are plenty of under-the-radar stocks riding the cybersecurity wave.

"Companies are going to start spending money in cyber security while before they were very slow to invest," said Darren Hayes, a professor of computer forensics and security at Pace University. "They're starting to realize that the bad publicity that comes from these attacks costs them more than investing in security."

Hayes pointed to Sony (SNE) as an example of a company still struggling to win consumer trust after an attack last April on its PlayStation Network division in which data from over 77 million users was exposed.

Global spending on security products and services is expected to top $71 billion by 2014, up from $55 billion in 2012, according to Gartner, as companies and government agencies look for ways to safeguard state and corporate secrets.

Here are three security stocks that may benefit from this surge in security spending:

Symantec

Symantec (SYMC) has seen shares rise over 13% this year as customers continue to buy bundles of its security and storage backup products.

During the third quarter revenue rose 7% to $1.7 billion. Adjusted profit jumped to 42 cents up from 35 cents in the year-ago quarter.

Amid weak growth in the consumer PC market, Symantec is bolstering efforts in its enterprise division. Revenue growth during the quarter was driven in large part by software sales to business customers which grew 17%.

Symantec is poised for growth particularly in new areas beyond PCs such as security mobile phones and tablets.

"Growth opportunities abound as security threats are constantly evolving," Morningstar analyst Sunit Gogia wrote in a research note. "Symantec's scale advantages will enable the company to extend its dominance into emerging areas."

Fortinet

Fortinet (FTNT) shares are up nearly 21% this year as the security hardware firm continues to benefit from increased demand for products needed to protect computer networks.

Analysts expect much of the company's growth to come from the enterprise market as it competes with Cisco (CSCO) , Juniper(JNPR) and CheckPoint(CKP) .

"We believe Fortinet's strong performance continues to be at the expense of larger networking vendors in the space that have struggled with their security portfolios," William Blair analyst Jonathan Ho wrote in a research note to clients.

One of TheStreet's Breakout Stocks, Fortinet posted adjusted profit of 14 cents a share during the fourth quarter, up from analyst expectations of 11 cents.

Revenue rose 29% to $120.9 million, above analyst projections of $113.5 million.

Sourcefire

Cyber security company Sourcefire(FIRE) has seen shares jump 9.1% since January, as the company announced plans to expand into the anti-malware market.

"Sourcefire is well-positioned strategically in a vibrant market with secular demand drivers," ThinkEquity analyst Daniel Cummings wrote in a recent analyst note.

In the December-ended quarter, analysts expect Sourcefire to post adjusted earnings of 19 cents per share, up from 17 cents last year. Revenue is expected to climb 24% to $46.97.

Another of TheStreet's Breakout Stocks, Sourcefire has also been a long-rumored buyout target for companies like Cisco and IBM(IBM) .

>>To see these stocks in action, visit the 3 Security Stocks Benefiting From Hack Attacks portfolio on Stockpickr.

--Written by Olivia Oran in New York.

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