Security Software Stocks: Is Your Portfolio Secure?

Probably the most important piece of software for business and home computer users is security software. When analyzing these companies, it is somewhat difficult to determine which ones fall into this industry. Even Microsoft (MSFT) might technically be a stock which includes security software as part of its product line, although most computer-using investors would probably disagree. Some may even consider Cisco (CSCO) to be in the software security business after their purchase of IronPort Systems, which makes e-mail and Web security software. Also CA, Inc. (CA), formally Computer Associates, also has a large security management division, but it is not their primary business.

Here are some of the purer plays in the security software field with market caps over $500 million. Maybe one of these will make your portfolio more secure.

Symantec Corp. (SYMC), a $17.75 billion company [market cap], is most known for its Norton product line, which includes include Norton AntiVirus, Norton Commander, Norton Internet Security, Norton 360, Norton Personal Firewall, Norton SystemWorks, Norton AntiSpam, Norton GoBack and Norton Ghost. The stock has a Price Earnings ratio of 48 and a Price Earnings to Growth ratio of 1.3. Quarterly revenues were up over 9% but earnings were down over 48%.

McAfee Inc. (MFE) develops and sells anti-virus, anti-spyware, firewalls, intrusion prevention, and other security software. The stock has a P/E of 40 and a PEG of 1.44. The company just released its 'North America Criminology Report: Organized Crime and the Internet' report. The stock trades on the New York Stock Exchange.

Check Point Software Technologies Ltd. (CHKP) is an Israeli company that produces and markets firewall and virtual private network [VPN] software. The stock carries a P/E of 20.5 and although revenues were up by about 23% for the quarter, earnings were down by around 24%.

Novell Inc. (NOVL) makes security and identity management software in addition to network software and application integration and collaboration solutions. Their products include Novell Access Manager, Novell BorderManager, and Novell Sentinel. They have a forward P/E of 45 and a PEG of 6.15.

VASCO Data Security International Inc. (VDSI) makes security and authentication software. Their product lines include Digipass and VACMAN. The P/E is 51 and the PEG is 1.14. Quarterly revenues were up 93% year over year and earnings were up 324%.

Trend Micro Inc. (TMICY.PK) is a Japanese based company which produces network antivirus and Internet content security software. The company recently reported a 12 percent growth in net sales for the latest quarter compared to the same period last year, however net income dropped 15.5% during the same period. The stock’s ADR’s were just delisted from NASDAQ and now trades on the Pink Sheets.

Websense Inc. (WBSN) makes and sells Web filtering solutions which can provide protection from spyware, phishing and other attacks. The P/E is 36 and the PEG is 1.55.

Juniper Networks, Inc (JNPR) is in the business of providing routers along with hardware firewalls, Secure Access SSL VPN gateways, security management systems, and intrusion detection and prevention appliances. The forward P/E is 24.5 and the PEG is 1.66.

Author does not own any of the above.