Iran War Alert: Buy Cyber

In 2008, I published a book called “The Forever Portfolio.”

It was horrible.

Not because the content was bad, but because nobody was interested in buying it.

When my publisher saw the numbers, he wanted to throw me out of the window.

If he had read the book and waited a few years, he might have felt differently…

As the name suggests, the book describes a group of stocks you can buy and hold forever.

The book predicted the success of companies like Eli Lilly (which has since returned 24x), Mastercard (which has since returned 39x), and Taser (which has since returned 197x).

It might sound unbelievable, but Chapter 3 actually predicted a global pandemic… 12 years before Covid-19.

But I’m not here to talk about the past.

Because there is an opportunity too big to ignore.

And it might be only weeks away.

The Cyber-Stock Scenario

Which brings me to Chapter 2 of the Forever Portfolio… cybersecurity.

Sounds boring and complicated. Believe me, I know.

But bear with me, because it’ll be worth the effort.

As I said in the book, it's only a matter of time before we see a large internet attack.

When that time comes, cybersecurity companies are going to skyrocket by 2x, 5x, even 10x…

Which brings me to today’s big news.

Overnight, Israel launched an attack on Iranian military officials and nuclear facilities.

In response, Iran launched a drone attack on Israel which was largely unsuccessful.

While things have quieted momentarily, it seems this attack is just the first of many.

This morning, President Trump announced on Truth Social that: “Iran must make a deal, before there is nothing left.”

This raises the possibility of an escalation to a full out war with the potential for cyberattacks.

In recent years, cybersecurity has been a critical tool in Israel’s defense strategy.

In 2010, Israel is believed to have used a virus to target and remotely destroy Iran’s nuclear arsenal.

Israel is also believed to have used a virus to cause a small explosion at the Natanz nuclear facility in Iran in 2021.

Then, of course, there was the operation in 2024 when Israel remotely detonated bombs inside Hezbollah’s pagers ahead of a ground invasion into Lebanon.

If history is any indicator, the next round of fighting with Iran could potentially include some element of cyber-warfare.

Which is good for cyber-security stocks.

Cybersecurity is a bit like going to the dentist… it's the kind of thing that no one wants to think about or spend money on, but if you ignore it, the problem gets bigger over time.

Highly visible cyber attacks are the best possible advertising that cybersecurity companies can ask for

Cybersecurity sales have historically ramped up following big cyber incidents like the ransomware attack on the Colonial Pipeline in 2021 or Caesar’s casinos in 2023.

Attacks on governments have a similar effect.

Earlier this month, we saw drone stocks skyrocket following Ukraine’s attack on Russian military bases, followed by Russia’s own drone attacks in response.

I would not be surprised if we see a similar trend play out in the coming days or weeks should the conflict between Israel and Iran continue to escalate.

Palo Alto Networks - A Rocketship Cybersecurity Opportunity

One of our favorite picks in the Cybersecurity space is Palo Alto Networks (PANW).

As we first described in our monthly issue in October of 2023, the company is a one-stop shop for cybersecurity products, software, and services.

The company is a leader in providing security solutions with multiple layers of security necessary for properly protecting systems that incorporate cloud software.

Palo Alto Networks sells its technology as a subscription service, which provides a reliable - and sticky - source of ongoing revenue.

Although the company was founded two decades ago - long before cloud technology became as essential as it is today - they’ve managed to continue to innovate and stay relevant… despite major shifts in technology.

The Bottom Line

Palo Alto’s ability to innovate is most clear in their development of AI-powered products offered by their Next Generation Security (NGS) division.

One of the tools within NGS is the company’s Cortex platform.

Cortex connects the different systems within an organization's infrastructure and uses AI to analyze vast amounts of data and detect unusual activity patterns.

As of the most recent quarter, NGS generated more than $5 billion in annual recurring revenue…. Roughly 34% higher than one year earlier.

The company plans to grow this number three-fold, to $15 billion by 2030.

In their latest quarter, Palo Alto Networks had decent results, beating expectations for both revenue and earnings.

Their revenue for the third quarter came in at $2.29 billion, which is up over 15% from last year.

Looking ahead, the company also expects strong results for the fourth quarter and the full year, projecting full-year 2025 revenues to be between $9.17 billion and $9.19 billion… or about 14.5% growth from 2024.

While some investors might have thought the quarter was nothing special, leading to a slight dip in stock price after the earnings report, the growth in NGS shows that the company is still on track to achieve its long-term goals.

No matter how challenging the economy gets, the AI revolution makes cybersecurity more critical than ever.

Based on the progress made in the third quarter and growing demand for cybersecurity, I’m as bullish as ever on the stock.

Why Palo Alto Networks Could Be the Big Winner

Tensions between Israel and Iran are rising by the day. Full blown war could break out at any moment. And when it does, cyber attacks will follow.

History shows us what happens next. Every time there's a major cyber incident, security companies soar.

We saw it with the pipeline attack. We saw it with the casino hack. We saw it just weeks ago with drone stocks.

The pattern is clear as day.

Palo Alto Networks sits right in the sweet spot. They're the leader in cybersecurity with $8 billion in recurring revenue.

Their AI-powered tools are exactly what companies need to protect themselves. And they're growing fast - 34% growth in their most important division.

But here's the thing most investors are missing…

You don't have to wait until 2030 to see massive gains.

The next cyber attack could happen tomorrow. Next week. Next month.

Smart investors know that the best time to buy is before the crowd realizes what's happening.

Because when the next major cyber attack hits - and it will hit - cybersecurity stocks like Palo Alto Networks won't just benefit.

They'll soar.

We may be on the edge of something big.

And if you’ve read this far, you’re already ahead of the curve.