The Rise of Cybersecurity and Cloud Storage
Cybersecurity has been in the news this year with the recent hack to the Colonial Pipeline that set off gas shortages in some parts of the country. This is just one of the latest cyberattacks that we’ve seen. It’s a “new age” for cybersecurity in the wake of recent cyber-attacks tied to SolarWinds and Microsoft, Wedbush Tech Analyst Dan Ives says – a significant ramp up from the recent couple of decades of such attacks. Given the rapid move to the cloud for both businesses and individuals, the need for cybersecurity and cloud storage has become critical for businesses and individuals. Major Cyber Incidents and Their Impact on Consumers The Colonial Pipeline hack resulted in severe gas shortages in the east and southeast portions of the U.S. over a number of days. Colonial supplies about 45% of the gas consumed on the east coast. Colonial paid about $5 million in ransom to the cyber hackers and was able to resume service, but the disruption was significant. The SolarWinds hack in early 2020 was perhaps even more significant, though the impact was more tied to businesses and several governmental agencies who use this system. Their widely used Orion system was hacked and updated with a code that provided a link to customer’s systems and data was sent out by the company to their customers. Brad Gastwirth, Wedbush Chief Technology Strategist says, “The US government will also be rethinking their security rollout across organizations. Expect to see large initiatives from many government agencies that can be very significant to the entire space.” Emerging Companies in the Cybersecurity Space Gastwirth says, “Cybersecurity will continue to be a dominant theme across enterprise software. The pandemic forced enterprises to rethink their strategy and spend billions to block cyber threats. There is not just one company that wins here, but several companies that play into many areas across cyber security will win.” Top Wedbush picks in the cybersecurity space include these seven companies: Varonis Systems Zscaler Telos Corp. Sailpoint Technologies Tenable Holdings Palo Alto Networks Fortinet Amazon Web Services The Growing Dependence of Companies and Consumers on Cloud Storage Companies that offer solutions in cloud storage will see increasing demand from corporations. Wedbush Tech Analyst Dan Ives and his team think that 44% of workloads will move to the cloud by the end of 2021, and that this figure will reach 55% by 2022. Many large players in the technology space are making a significant push in the cloud space including: Amazon Web Services Microsoft Azure Google Cloud Platform Alibaba Cloud IBM’s Red Hat service These giants as well as a number of smaller players have flocked to the cloud space due to the demand for corporate customers as well as consumers. Cloud storage offers a number of advantages including: Cost savings. Things like hard drives and all of the accessories that go with supporting them are no longer needed. This includes the electricity to power these large enterprise level hard storage devices. Data redundancy is a built-in feature as most cloud storage providers keep multiple copies of your data. Different tiers of storage services can help save money. Individuals and companies can select the level of storage service that meets their needs and not pay for capabilities they don’t require. Regulatory compliance. This can apply to companies who are obligated to store customer data in the same geographic region where their customers are located, such as the European union. Ransomware and malware protection. Cloud storage can provide an added level of security against these increasingly frequent threats to your data security. Securing Your Data at Work and at Home With the rise of remote work during the pandemic, and the expectation that remote work is here to stay at least in part, it’s critical that companies establish systems and protocols to keep their data secure. Cybersecurity will become an even more vital part of doing business. With the rise of online transactions and accounts for just about everything we do as consumers, cybersecurity and secure cloud storage are crucial for consumers as well. Implications for Investors Wedbush research analysts expect cybersecurity spending to jump more than 20% in 2021 alone. Companies who can provide cybersecurity and accessible cloud storage should fare well in the post-pandemic world. Gastwirth says, “You can argue that post-pandemic and because of remote workers the environment has gotten even more dangerous for enterprises who will need to spend even more to secure their networks.” All cybersecurity and cloud storage offerings are not created equal, however. As with all sectors there will be winners and losers who emerge. Investors need to understand the pros and cons of the technology and the product offerings of any companies in these sectors before investing. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
Planning for Summer Vacation
“There is little doubt that travel is one of the activities that consumers have missed the most during the pandemic, and we believe demand will come roaring back as an increasing portion of the population gets vaccinated and we approach herd immunity,” says Wedbush research analyst, James Hardiman, CFA®. That said, any recovery in the travel and leisure industry is likely to be an uneven one across industry sectors. The Impact of the Pandemic Spending on travel in the U.S. declined by 42% in 2020 according to one source. Online travel booking service Expedia saw their revenues decline by 57% in 2020, with gross bookings down 66% for the year. Travel companies including airlines, cruise ships and hotels all reported similar drastic declines in 2020. Airline revenues for 2020 were about 40% of what they were in 2019. This brought revenues back to levels not seen since the year 2000. American Airlines has said that its business was off some 70% versus 2019. By one estimate, the downturn in cruise ship travel will have cost the U.S. over $32 billion in economic activity and a loss of over 254,000 jobs. Complicating the return to business as we come out of the pandemic is the situation in Florida between Norwegian Cruise Lines and the state. The governor of Florida has indicated that businesses in the state cannot require customers to show proof of vaccination to receive service. This is at odds with the policies of Norwegian and may cause the company to skip Florida for ports in the Caribbean and other states. Hardiman says of the cruise industry, “While the demand for cruise travel will almost certainly outstrip supply in the near term, the cruise industry remains at the whims of regulators worldwide, most notably the CDC, which has given mixed messages and shown little urgency in the effort to get ships back on the water.” In a recent interview the Norwegian Cruise Line CEO indicated that their advance bookings for 2022 was the best it’s ever been. Preparing for COVID Protocols and Restrictions Regardless of where people might be traveling this summer, they should prepare for any restrictions in terms of vaccination status or others that might be in place either in transit to their destination, or at their ultimate destination. It is very wise to do your homework in advance, so you are not surprised or disappointed along the way. Airlines, cruise ships and other forms of transportation all may have their own pre-boarding rules, as well as rules while on the plane or the ship. Different destinations may have their own requirements. Those traveling abroad should be aware of any entrance requirements in terms of safety, as well as any masking or other requirements while in the country. Budgeting for Major Trips in Advance As demand for travel increases, the cost of some destinations and some modes of travel might see an increase in price due to both an increase in demand and in some cases limited supply. This might result in a much more expensive travel experience than you had anticipated, especially if the trip involves a large group such as an extended family reunion. If this is your situation, it is a good idea to discuss this expense with your financial advisor to ensure that you budget for this cost accordingly. Leveraging Vacation Insurance Vacation or travel insurance has grown in popularity post-pandemic. According to one travel insurance company, they are seeing upwards of 40% of all travelers purchase some sort of travel insurance when booking their trip or at least prior to leaving for their travel destination. Some countries may require insurance, Costa Rica is one example. Travel insurance coverage can include health insurance, in some cases including coverage if you or a member of your traveling party contract COVID-19. Policies might also include trip cancellation or interruption insurance, coverage for lost luggage and other types of coverage that you hopefully will not need, but that can be a financial life saver if you do. When shopping for vacation insurance you will want to consider the cost of your trip and the features of the policy you are looking to purchase. How Rising Demand for Travel can Impact Investors Hardiman says, “Within our coverage, we expect theme parks to have a robust summer, with the biggest gating factor being labor availability and rates.” This could bode well for the stocks of theme park owners. The increased demand for travel could benefit a number of stocks. Airlines have shown strong bookings, and this could aid their stocks. Travel booking services have also shown strong demand with many travelers looking to book vacations. A trend that grew during the pandemic was an increase in the use of RVs for travel and it is expected that this trend will continue. Hardiman says, “Alternative accommodations are also likely to see unprecedented demand, benefiting most directly Airbnb and Expedia’s VRBO unit, although both companies will continue to see headwinds from their international business exposure.” The travel and tourism industry might offer some opportunities for solid gains in 2021 and beyond, but investors need to be selective in making investments in this sector. As always, look closely at the underlying business issues and financials of any company that you are considering investing in. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the
What’s Next for the Silver Screen
Wedbush Entertainment Analyst, Alicia Reese says of movie theaters, “Movie theaters were a mature, low-growth industry pre-pandemic. Investment was made based on expected market share gains, dividends, and/or international expansion.” We take a look at what’s next for this industry as theaters reopen and bring new movies to the silver screen. Market Value for Movie Theater Companies The pandemic hit movie theater stocks hard as they were forced to close most locations, and at best show films with very limited seating. Even when theaters were open attendance was sparse amid fears of contracting COVID-19. AMC (ticker AMC) stock’s high over the past three years was just over $21 reached in mid-September of 2018. It’s intraday low over the past year was just under $2 per share. The shares recently traded around $13 per share, representing a significant gain since the end of 2020. IMAX (ticker IMAX) another major player in this space saw its high over the past three years reach about $26 in mid-September of 2018 as well. The stock hit lows around $9 per share in late March of 2020 as news of the pandemic hit the financial markets. The stock hit a high of about $24.50 per share this year and recently closed around $21 per share. How the Industry has Responded Reese notes, “The rise of streaming and correlated cord-cutting has not directly impacted theatrical box office, as many of the same streamers also go to the movies. There’s more content available now, and content-lovers are just consuming more.” She adds, “Many studies have been published over the last few years on the correlation of streamers and movie-goers – the more hours streamed monthly, the more a given person is likely to go to the movie theatre. Another cohort who did not go to the movies before have picked up streaming in exchange for cable-viewing.” Reese goes on to say, “While we think the domestic exhibitors under our coverage have done an excellent job with sanitization and general safety during COVID, concerns remained for many, and the lack of prime studio content kept many away. In the meantime, studios have had the opportunity to test day-and-date releases with virtual impunity. WarnerMedia continues to hold to its strategy of releasing its content day-and-date with HBOMax throughout 2021, going back to a traditional exclusive theatrical window in 2022.” She also commented that, “Universal’s agreements with AMC and Cinemark provide for a shortened theatrical window, presumably trading lower film rent for the reduced window and the high likelihood that blockbusters will remain in theatres much longer. Cinemark has now reached an agreement with all of the major studios, with a different approach that works for each partnership. Stated simply, this means that Cinemark won’t boycott any films, and will get some benefit from any reduced windows.” In short, the pandemic has increased the need for movie theaters to improvise in the face of uncertain demand plus the ongoing competition from streaming services and other outlets. Potential for Return of Demand as COVID Restrictions are Rolled Back This is the key question for the industry and certainly for investors. Reese says, “We have not seen any studies that show a meaningful shift from the movie theatre to streaming at home only. However, many investors harbor concerns that the pandemic has forced this shift or maybe accelerated the already-occurring shift.” She adds, “We still think that Gen Z, especially those under 21, will go to the movies with friends versus staying at home to watch. Dates at any age, especially first dates post-pandemic, will not occur at home – people will want to get out of the house. As long as there is good content exclusively shown for a time in theatres or at a reasonable price vs. as PVOD at home, people will go.” What These Trends Mean for Investors Movie theater stocks may be a solid post-COVID play in some cases. Wedbush research analyst, Michael Pachter doubled his per share price target for AMC in early March. Even with his increased price target for the stock, Pachter kept his rating for the stock at neutral citing concerns about the company’s debt burden as having a potential dampening effect on the stock even in the wake of the expected post pandemic bump from the reopening of theaters. Reese recently upgraded the firm’s outlook for IMAX stock from neutral to outperform. She cited the pent-up demand in Japan, China and elsewhere in Asia having driven an increase in the company’s market share there. She expects similar results as Europe and North America reopen in the coming months. Much will depend upon how well the public responds to the reopening of theaters and the ability of the various theater companies to bring their revenues back to or above pre-pandemic levels. Many of these companies also have significant debt on their balance sheets and this will be a factor in their ability to thrive and prosper going forward. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.