“WikiLeaks has seriously upped the ante when it comes to online security,” Cramer said Thursday, “and I think we're looking at a multiyear boom in the space.”
His plays on the trend? Intel and eBay .
Yes, Intel and eBay. So many of the other obvious plays here have run too much—Symantec , Radware , Fortinet , VeriSign —cutting them out of contention. Plus, Intel and eBay offer a way into the market that most people have overlooked.
Intel has McAfee, which was acquired in August and with account for just 5 percent of Intel’s total sales. Not much for a $120 billion company, eh? But Cramer’s thinking bigger than that. Now Intel can embed security software on its semiconductor hardware, and PCs with McAfee-enhanced chips should start hitting the market sometime in 2011.
This is a huge deal when you consider the price increases that should come with these new semis. Intel ships about 250 million PC platforms a year, so even just a dollar’s worth of a bump would translate into big money.
Plus, McAfee is the higher-margin, higher-growth part of Intel’s business. And rather than just offering anti-virus software for consumers, McAfee earnings most of its money from enterprise customers, exactly the kind of corporations looking to prevent a WikiLeak-type leak.
Of course, Intel is still a strong company in its own right. It’s riding a new server cycle thanks to the next-generation processors in smartphones and tablets, it’s pays a 3.4-percent dividend yield, and it’s trading at just 9.4 times next year’s earnings when you back out the $3 in cash per share.
eBay’s PayPal plays its part by facilitating fast and secure payments online. Think about it: If WikiLeaks can get its hands on uber-secret government documents, then how hard will be for some hacker to steal your personal and financial information off the Internet? As of right now, PayPal accounts for just 13.5 percent of all online payments, but Cramer thinks the number could jump to 20 percent by 2015. That, he said, would translate into years and years of double-digit revenue growth.
And like Intel, eBay itself is doing OK, as it benefits from global e-commerce growth of 7.5 percent a year. Cramer thinks it’s worth buying the slower eBay just to get a piece of the fast-growing PayPal, which he called “a huge cyber weapon against the WikiLeaks ballistic hacking.”
When this story published, Cramer’s charitable trust owned Intel.
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