How to profit from the 11 billion ways to hack you
January 14, 2019

From Stansberry Research:

Today, there are more devices connected to the Internet than there are humans on this planet.

Social media management platform Hootsuite and media company We Are Social recently released their 2018 Global Digital suite of reports, which said more than 4 billion people use the Internet. And that number is growing exponentially... Nearly 250 million of those users came online for the first time just last year.

Those 4 billion users had an estimated 11.2 billion Internet of Things ("IoT") devices in 2018, which means billions of opportunities for cyberattacks.

The more the Internet permeates our society, the more we rely on it... the more time we spend on it (an average of six hours a day!)... and the more we share with it.

Take mobile phones, for example...

The Hootsuite/We Are Social report found that two-thirds of the world's population owns a mobile phone. That's 5 billion phones. Half of those – 2.5 billion – are smartphones, up from just 403 million smartphones 10 years ago.

And we use them for everything. About half of all web traffic is on mobile phones. We use them for e-mail, photos, personal information, banking apps, online payments, and more...

As such, mobile-payment systems like Apple Pay and crypto wallets have become targets of cyberattacks. If you invest in cryptocurrencies, you need to be worried about more than losing your crypto wallet. Entire exchanges are at risk.

Cybersecurity company McAfee – now owned by chipmaker giant Intel (INTC) – estimates two-thirds of the people online are cybercrime victims, or more than 2 billion people. It also estimates there are 80 billion malicious scans in a single day.

Fortunately, one cybersecurity company is blazing the trail with comprehensive, unique, easy-to-use software...

Fortinet (Nasdaq: FTNT) is a $12 billion cybersecurity firm based out of Sunnyvale, California. It has supplied cybersecurity hardware and software since 2000, selling a comprehensive suite of subscription services, including next-generation firewalls, web-filtering, e-mail security, and malware/spam protection.

We like Fortinet because it has taken a lead position in the trillion-dollar IoT market as the most innovative cybersecurity company in a complex and competitive space.

Fortinet has a unique approach to cybersecurity: the "Security Fabric" approach.

This is an integrated, protective cybersecurity "blanket" that covers an entire business and can scale no matter the size, number, or type of devices.

It's all centralized in an operating system called FortiOS.

FortiOS is a massively integrated system that accommodates any environment in a one-stop solution. Its products scale, are relatively low-cost, and can easily integrate into existing systems. It provides IT teams a holistic view into all devices, network traffic, applications, and events. And the Security Fabric integrates seamlessly into existing hardware configurations, virtual machines, and any cloud environment.

This is a huge benefit over competing cybersecurity solutions.

Fortinet generated $1.5 billion in sales in 2017 – up almost threefold from the $534 million it did in 2012. And when the company finalizes numbers for 2018, it should hit close to $1.8 billion – roughly 20% over the prior year...

Fortinet is also squeezing more free cash out of every dollar in sales. Over the 12 months ending September 30, around one-third of its sales – or $560 million – filtered down into free cash flow ("FCF")... up from 24% in 2015.

Regular Stansberry Research readers know FCF is our favorite number. It's what is left after management has paid all operating expenses and capital outlays. You can't fudge FCF. It allows management to look after shareholders by reinvesting in the business or paying dividends and buying back shares.

The company is still in a high-growth phase, so we expect it to plow money back into the business.

Ken and Michael Xie co-founded Fortinet in 2000 and released its first product in 2002. Ken still serves as chairman and CEO. Michael is the company's president and chief technology officer. They hold a little more than 7% of the stock each – a combined 14% between them.

Ken has been in this business for more than two decades and has proven himself time and again. In 1997, he founded Internet security firm NetScreen Technologies. Seven years later, in 2004, he sold it to competitor Juniper Networks for $4 billion – nearly quadrupling early investors' money in the process.

The two are doing it again with Fortinet...

Under Ken and Michael's management, Fortinet has grown sales at an exceptional compounded annual growth rate of 54%. Investors have made roughly 730% over the last decade – an average of 26% per year.

Today, the company has more than 375,000 customers worldwide. Its primary sales channel is through distribution. But it also partners with large tech firms like Microsoft (MSFT), Google's parent company Alphabet (GOOGL), Salesforce (CRM), and Amazon Web Services. Clients include data centers and large American corporations, like most Fortune 100 companies.

With Fortinet, we have a growing company that is already proving itself as a "Global Elite" business dominating its sector. We can get in alongside founders with a proven track record... and a company with tremendous growth opportunity in its chosen market for decades to come.

The overall market pulled back at the end of last year, and tech stocks took a hit. The Nasdaq fell almost 24% from its August high, and Fortinet shares are down about 20% from their October highs. The lower share price gives us an exceptional entry point. And with the wind at its back, we expect to see high-double-digit annual growth for years to come. A double over the next two years is within reach.

Sometimes investing is simple.

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