As computing moves into the cloud or goes mobile, security is increasingly becoming more of a concern with small cap stocks Sourcefire, Inc. (NASDAQ: FIRE), Wave Systems Corp. (NASDAQ: WAVX), VASCO Data Security International, Inc. (NASDAQ: VDSI), NQ Mobile Inc (NYSE: NQ) and Cloud Star Corp (OTC: CLDS) being some of less familiar names offering security products or services to address those concerns. It should be mentioned that mobile malware has advanced to a new level of sophistication and ABI Research estimates that mobile security services will hit the $1.88 billion mark by the end of the year while Infonetics forecasts sales of cloud-based security services to grow 69% over the next 5 years.
With that in mind, here is a quick look at five small cap mobile or cloud security stocks that might not be on your radar screen:
- Sourcefire, Inc. With solutions from a next-generation network security platform to advanced malware protection, Sourcefire, Inc. is focused on helping global large- to mid-size organizations and government agencies manage and minimize network security risks. Earlier in the week, Sourcefire announced it had hired former ScienceLogic leader John Becker as its new CEO, but investors seems unimpressed as share fell slightly. However and back in February, Sourcefire rallied after reporting better than expected and record revenues along with a better than expected revenue forecast while one analyst upgraded the stock saying the results dispelled fears that the company’s government and Europe, Middle East and Africa businesses was suffering. On Friday, Sourcefire fell 2.2% to $52.40 (FIRE has a 52 week trading range of $39.50 to $59.64 a share) for a market cap of $1.61 billion plus the stock is up 7.2% over the past year and up 716.2% over the past five years.
- Wave Systems Corp. Unlike other vendors who try to secure information by adding layers of software for security, Wave Systems Corp reduces the complexity, cost and uncertainty of data protection by starting inside the device by building security capabilities directly into endpoint computing platforms. Last March, Wave Systems Corp took a double digit plunge after reporting a $34 million net loss for the year - triple the previous years’ loss as personal computer shipping volumes and royalty rates declined. However, Wave Systems Corp apparently made important strategic investments to advance its solutions for security, management and data protection for tablets and smartphone devices while its CEO acknowledged being surprised by both the speed of mobile adoption and the impact it had on demand for some of the company’s core PC solutions. On Friday, Wave Systems Corp fell 3.14% to $0.62 (WAVX has a 52 week trading range of $0.53 or $1.59 a share) for a market cap of $65.16 million plus the stock is down 61.2% over the past year and down 36.7% over the past five years.
- VASCO Data Security International, Inc. A global software company, VASCO Data Security International, Inc offers technologies to secure sensitive information and transactions for the enterprise security, e-commerce and e-government industries. Specifically, VASCO Data Security International serves approximately 10,000 companies in over 100 countries, including more than 1,700 international financial institutions. It should be noted that the last time VASCO Data Security International reported earnings, shares dipped after the company reported a 20% fourth quarter revenue decrease to $38.8 million and an 8% decrease to $154.0 million for the full year. Fourth quarter net income fell 81% to $2.2 million while net income for the year fell 33% to $16.2 million. VASCO Data Security International blamed these results on the “transactional nature of our business” but its Chairman/CEO was quick to add that the business is showing good growth over the longer term. On Friday, VASCO Data Security International fell 1.19% to $8.28 (VDSI has a 52 week trading range of $6.51 to $10.41 a share) for a market cap of $325.21 million plus the stock is down 19.4% over the past year and down 38.1% over the past five years.
- NQ Mobile Inc. Formerly known as NetQin Mobile Inc. and with headquarters co-located in Beijing and Dallas, NQ Mobile is a mobile security and productivity company dedicated to protecting mobile devices and all the valuable information it holds. The company has approximately 283 million registered user accounts in over 150 countries worldwide and a growth rate of 455,000 users per day. In early March, NQ Mobile surged after beating Wall Street’s expectations. Moreover, shares also sureged before earnings were reported after the company announced a deal with Carlos Slim’s America Movil SAB. However, investors should remember that although NQ Mobile has a headquarters in the USA, its still effectively Chinese small cap stock which might make some investors nervous. On Friday, NQ Mobile rose 3.74% to $8.59 (NQ has a 52 week trading range of $5.07 to $12.70 a share) for a market cap of $377.96 million plus the stock is down 17.5% over the past year and up 2.3% since March 2011.
- Cloud Star Corp. A provider of security, technology and other products to the technology marketplace, Cloud Star Corp operates in the remote access computing sector and has developed patent-protected remote access security devices such as the MyComputerKey™ - a USB device that inserts into a home computer to allow access to a remote machine or a cloud based environment. Right now, Cloud Star Corp is making Improvements to the device by implementing biometric authentication as a backup just in case passwords are compromised plus its being tested and evaluated by several corporations and cloud computing innovators. When tests are completed, Cloud Star Corp will introduce the MyComputerKey into the consumer marketplace. In addition, an enterprise version for corporations with mobile workforces is also in the advanced stages of development. On Friday, fell 8.59% to $1.17 (CLDS has a 52 week trading range of $0.11 to $1.47 a share) for a market cap of $113.72 million plus the stock is up around 966.7% since early February according to Yahoo! Finance.
The Bottom Line. With the shift away from the PC to mobile devices or the cloud, at the very least investors should keep an eye on small cap mobile or cloud security stocks like Sourcefire, Inc., Wave Systems Corp., VASCO Data Security International, Inc., NQ Mobile Inc and Cloud Star Corp.