Symantec Corporation (SYMC), General Dynamics Corporation (GD) & Hedgies’ Favorite Cybersecurity Plays

4. Check Point Software Technologies Ltd. (NASDAQ:CHKP) and 5. Fortinet Inc (NASDAQ:FTNT)

Rounding out this top five we have Check Point Software Technologies Ltd. (NASDAQ:CHKP) and Fortinet Inc (NASDAQ:FTNT), each holding similar interest of 27 and 26 funds, respectively, in the latest 13F-filing period. Both companies’ stocks have been in the red in 2013 thus far, with Check Point losing 2.3% and Fortinet dropping 15.1% of its value. It’s also interesting to note that while hedge fund interest for Check Point Software Technologies Ltd. (NASDAQ:CHKP) increased by 4%, the number of managers in Fortinet Inc (NASDAQ:FTNT) fell by 13%.

When pressed to choose one out of this fourth and fifth place duo, we’d rather have Check Point Software Technologies Ltd. (NASDAQ:CHKP), which trades at a much lower earnings multiple of 12.5x, versus Fortinet’s bloated +26x valuation. While most analysts expect the latter company to experience greater earnings acceleration than Check Point Software Technologies Ltd. (NASDAQ:CHKP), it appears that investors are actually overestimating this differential. Check Point sports a PEG ratio, which measures how the market values estimated EPS growth, of 1.5—in the moderate range. Fortinet Inc (NASDAQ:FTNT), meanwhile, is over 75% more expensive.

Final thoughts

On the whole, there are many investment-related trends that readers are likely betting on over the long run. From fiber Internet to 3D printing, there are plenty of candidates for the next decade’s can’t-miss industry, but one that’s flying under the radar is cybersecurity.

Though the U.S. government’s overall level of defense spending looks set to be cut over the coming years, President Obama’s latest budget proposal for FY2014 asks for an additional $1 billion in outlays for cybersecurity up to $13 billion total. While nothing is set in stone, it’s a fairly reasonable guess that America’s next war may be fought electronically, rather than on a physical battlefield. If this were in fact the case, EMC, General Dynamics Corporation (NYSE:GD), and the rest of the stocks mentioned above would make a great cornerstone in any portfolio.

Disclosure: none