Cybersecurity Firms to Watch in 2014

It seems like not a day goes by that we don't hear about the NSA spying, Russian teen hackers, or new details about the Target security breach. Our bank, email, and social network accounts are ripe for the taking. Consumers will never fully trust retailers with financial or private information again. It's another "new normal" thrust upon us, and it's here to stay.

Hackers, phrackers, and crackers continuously find loopholes, gaps, and other open doors into our data. No matter how complex the information security or how strong the firewall, threats will persist -- and sometimes circumvent even the best-designed security technologies. The general public's new realization of just how serious cyber threats are has put cybersecurity firms in the spotlight. Barracuda Networks (NYSE: CUDA  ) , F5 Networks (NASDAQ: FFIV  ) , and Check Point Software Technologies (NASDAQ: CHKP  ) are three cybersecurity firms to watch in 2014.

One mean fish
Barracuda Networks is poised for growth. The company specializes in easy-to-install cloud and security solutions. With the recent Target banking breach, Barracuda Networks products and services will be in high demand. The firm adds value by offering products in three key areas: storage, application delivery, and content security. The Barracuda Web Security Service, Barracuda Email Security Service, and Barracuda Web Application Firewall should be flying off the virtual shelves.

Barracuda Networks also has products and services that cover cloud-enabled appliances. Citibank, IBM, FedEx, Harvard, and Coca-Cola are just some of the 180,000 organizations that use Barracuda Networks products and services. The company has focused on providing clients with a cost-friendly solution. Barracuda has strong recurring revenue because of a robust subscription model. The company is a trusted vendor in the mid-market IT space. Customers like the responsive deployment -- often within 24 hours -- and Barracuda's knowledgeable sales and technical teams. These teams work with customers to close the sale and implement the technology.

Check Point gnarly
Check Point Software Technologies is Internet security. The company has deep roots in web security. Founded in 1993, it's been the go-to company for businesses and governments looking to stop cyber attacks. With solutions for network, data, and mobile security, Check Point Software will be a winner as more companies look to secure not just their data, but their customers' data. Check Point Software has been innovative in its software development, and savvy and innovative thinking has led to key mergers and acquisitions over the past decade that have deftly shielded the company against upstarts like Barracuda Networks. Check Point Software had a strong 2013. Total revenue was $331.7 million, up 3% year over year. The tech company placed in the "Leaders Quadrant" of Gartner's recent Magic Quadrant for Mobile Data Protection. This was Check Point's seventh time selected as a leader by Gartner. This is the equivalent to getting an Emmy in the IT security industry. Being named a leader means your products become industry standards and are shortlisted on most RFPs.

I have Five on it
F5 Networks is all about solutions. Solve it, believe it, build it, and support it -- F5's unofficial tag line says it all. The Seattle technology company has been on a tear. Like the F5 tornado for which it was named, it's been ripping through the IT security sector. The company's BIG-IP product line has been a solid performer for years. F5 has also been a go-to company for those wanting industrial security. Maintaining market leadership with competitors like Cisco Systems, Barracuda Networks and A10 Networks has not been easy, but F5 has done it -- and thrived in the process. F5 has even worked with companies like Amazon, offering secure billing systems that work on Amazon Web Services and link with F5's BIG-IP products.

Networking pays off
Barracuda Networks shares are somewhat of a mixed bag right now. At $35.68 per share, the stock is modestly priced, but the return on investment and operating margin are both negative. The -6.25 operating margin is not a deal breaker, but this and a -9.34 ROI point to F5 possibly needing to burn through cash reserves instead of growing the business. With Barracuda Networks' subscriptions and overall business growth, these negative numbers are a concern.

Thankfully, the negative numbers are in the low single digits. But why are these numbers negative, given Barracuda Networks' industry prowess? Mixed numbers aside, Barracuda Networks is a good growth tech stock to watch -- and possibly buy -- in 2014.

F5's stock has been active and is up 6.62% year to date. The shares are attractively priced at $97.48. This stock will certainly eclipse the century mark during this quarter. The company's earning report was good. Its reported first-quarter EPS was $0.03 better than the consensus estimate of $1.19. F5 saw revenue for the quarter increase to $406.5 million, while estimates called for only $396.27 million. Like most tech companies, the stock's P/E is high at 27.79, but this stock should be part of any value-driven technology portfolio.

The Foolish takeaway
As more companies and customers demand that their data be private, secure, and accessible, look for the profiles of Barracuda Networks, F5 Networks and Check Point Software to rise. These three companies have proven solutions and services to thwart growing threats.

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