Hacking Fears Boost Cybersecurity Shares

One of the most watched industries this year has been cybersecurity as several high-profile cyber attacks have drawn attention to the fact that hackers seem to be one step ahead of the programs protecting companies' data.

Not only have private firms been spending more on new security tools to keep their customer data safe, but cybersecurity businesses are also being granted large government contracts in order to thwart hacking attacks from foreign countries as well.

Threats Rise

On Wednesday, a survey showed that security threats against American, British and Canadian companies are quickly rising and businesses are struggling to keep up.

The move toward cloud-based computing has created an entirely new range of cybersecurity threats that most firms are not prepared to deal with.

Additionally, a lack of training among employees has made it easier for hackers to get inside company databases through workers' personal phones and computers.

Investors Get On Board

Investors have also taken notice of the industry setting shares of cybersecurity companies on fire over the past couple months. FireEye Inc. FEYE saw its fourth quarter revenue jump by 150 percent last year and shares of CyberArk Software Ltd CYBR have increased by more than 40 percent so far this year.

A relatively new ETF has emerged in the sector called PureFunds Cyber Security HACK in order to give investors a way to play the sector as a whole; FireEye, CyberArk and Infoblox Inc. BLOX make up the fund's largest holdings.

Related Link: How Contract Management Helps Hedge Against Financial Services Cyber Threats

A Bubble About To Burst?

Many worry that the recent rise in cybersecurity share prices can't be sustained. However, some analysts say the rise has been warranted as the firms aren't just trading on headlines.

The hacking attacks like those carried out at Sony Inc. SNE and Anthem Inc. ANTM not only dominated the news, but genuinely boosted security firms' balance sheets.

FireEye was hired by both companies to clean up the aftermath of the attacks, while other firms saw an influx of new corporate customers looking to prevent similar situations.

Also, with more and more businesses taking their data online, the threat of a breach is set to keep rising— making the demand for security firms likely to continue.