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More Hacking From Inside China, Trading Opportunities (MS, GOOG, MFE, SYMC)

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Hackers have struck again. As Benzinga readers are already aware, there have been a plethora of recent attacks by hackers on companies and on the NASDAQ itself. Recently, Morgan Stanley (NYSE: MS) was the target by China-based hackers.

According to Bloomberg, the hackers gained access to highly sensitive information about Morgan Stanley. The same hackers are believed to have attacked Google (NASDAQ: GOOG) last year as well; a cyber security expert believes the number of companies attacked by this string of hackers is well over 200 – up from the estimated 20 to 30 previously.

The details about the information obtained by the hackers is presently undisclosed. The reaction to the news is not overwhelmingly negative as Morgan Stanley is trading only slightly lower in the pre-market from yesterday's close of $29.68.

After the attacks on Google and about 20 other large companies, McAfee (NYSE: MFE) Chief Technology Officer George Kurtz called it “largest and most sophisticated cyberattack we have seen in years targeted at specific corporations,” according to the article.

Benzinga readers also know that energy companies have been the target of recent attacks, and in some cases, the hackers operated undetected for over a year.

With the superfluity of hackings lately, it may cause a blow to investor confidence in both the companies and the markets. With the hacking of the NASDAQ in particular, investors may be concerned about security of the markets and if the integrity of the system is being upheld.

However, is there a way to profit off of the misfortune of these companies and systems being attacked? It is possible that companies are scrambling to upgrade their cyber-security measures, raising significant revenues for companies like McAfee and Symantec (NASDAQ: SYMC), who provide such services?

McAfee is closed Monday at $47.95 and is up only slightly in pre-market trading. Symantec has not wavered since it closed Monday at $18.03. Both companies have experienced increases in their stock prices over the year and with the current hacking situation, it is possible the trend might continue for some time.

Looking at the financial statements more in-depth, a Du Pont analysis reveals that Symantec has a much better return on equity as it possesses higher values representing operating efficiency, asset use efficiency, as well as a greater degree of financial leverage. Though both McAfee and Symantec have reported lower return on equity (ROE) ratios for the time periods examined, McAfee has improved its asset use efficiency whereas Symantec has been lower on all dimensions.

Using this information however, Symantec may present a better buying opportunity, as it also boasts a lower forward P/E of 11.48 compared with 15.72 for McAfee. Symantec almost doubles McAfee's ROE ratio, and with a higher beta of .92 over McAfee's .60, it may show higher increases in its stock price as the economy continues to make progress with the economic recovery.

Neither Benzinga nor its staff recommends that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

The Du Pont analysis for Symantec was utilized using year-over-year data, as 2010 data was readily available. Adjustments were made to net income to account for non-recurring charges in 2009 which resulted in a huge net loss.

The Du Pont analysis for McAfee was performed using the two most recent quarter data, as the 2010 data was not readily available.

Posted-In: Bloomberg cyber attacksLong Ideas News Short Ideas Tech Media Trading Ideas

 

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