Cyber Security Players Under- and Outperforming $QQQAs we all know, its been a particularly volatile year for NASDAQ and tech equities across the board. At its lowest YTD (on 11.3), QQQ was down nearly 35%. A 7% intraday rally picked NASDAQ up from its bottom, but the trend is clear: with rising inflation, shrinking consumer savings, and broader downturns in the global macroeconomic environment, investors are losing their appetite for risker tech plays. Despite the gloom and doom that has fallen over many over course of what is one of US equity markets worst years on record, cyber security is one industry that has remained competitive, largely in response to two mega trends: 1) an uptick in the frequency and sophistication of cyber offensive operations, and 2) increased public scrutiny of cyber security as a consequence of the ongoing Russia/Ukraine war.
So which cyber security companies are outperforming baseline indices and which ones are falling short? At the top of our list are HUB.TA (+2.48% over past 3mo) and PANW (+1.24%) over the same time frame. Palo Alto Networks is a staple of many blue chip tech funds, and the company remains one of the leading names in the date security field. Despite significant volatility in both markets and supply chains, PANW has continued to post strong financials as it tracks modest gains amidst double-digit losses.
The MVP of the past 3 months is HUB Security, currently traded on TASE as HUB.TA but is eyeing an imminent NASDAQ listing via SPAC merger with RNER under the symbol HUBC. Driving HUB.TA's strong recent performance is anticipation over its US listing. Just in recent days the SEC released an amended F4, signifying that the final regulatory hurdles are being tackled prior to HUB's delisting from NASDAQ and simultaneous NASDAQ listing. HUBC will start trading at $10/share for an initial capitalization of ~$1.3b, so keep this outperformer on your watchlist.
Underperforming QQQ are other cyber blue chips that have struggled to eke out price action gains over the past quarter. Microsoft, Intel, Radware, and Crowdstrike are all underperforming the NASDAQ baseline due to a number of reasons. INTC is still struggling to finds it footing after the passage of the CHIPs Act in August, which fundamentally reorganized the domestic chip and computing manufacturing ecosystem. RDWR missed its Q3 earnings forecast, potentially contributing to its recent drop. Despite its poor recent performance, CRWD still retains the trust and admiration of analysts, who have flagged its an undervalued stock ready for gains given a change in the macro backdrop.
Its been quite the year for equity traders and investors, but I for one am looking forward to a bullish 2023. This is not financial advice, just some personal commentary. Trade responsibly.
