Cybersecurity stocks! How I’d invest £500 in AIM-listed tech shares

Cybersecurity Stocks are enjoying a rise in popularity as individuals and businesses seek to restore privacy and secure their data.

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Cybersecurity Stocks are hot right now as the lockdown forces home working and tech shares see their value skyrocket. It’s not just ordinary citizens who find themselves working from home. Government and local authority staff are also doing so. It means security could be compromised more easily than in the workplace, putting confidential data at risk.

Governments around the world and bodies such as the World Health Organisation have reported a rising tide of cyber scams targeting pandemic fears. A scary prospect for everyone, but an opportunity for cybersecurity firms to step up and provide solutions.

Cybersecurity stocks in the spotlight

One such firm is cybersecurity software provider Kape Technologies (LSE:KAPE). 

Kape is attempting to address this mounting problem with software that protects your identity and your data. Kape bills itself as “the first truly global privacy and security company owned by the public.” Its offerings include VPNs Cyber Ghost and ZenMate, Intego security software for Apple products and Restoro Technology to clean up Windows operating systems.

After crashing over 30% in March, the Kape share price has climbed 63%. During this time, its price-to-earnings ratio (P/E) has skyrocketed to 148. This indicates a lot of positivity and may make it a speculatively overpriced buy. However, the mass shift into home working has boosted demand for Kape’s digital privacy software. Personally, I think it will continue to see demand for its suite of products grow.

Kape’s earnings per share (EPS) are 1p and it has no dividend. It has a 4% operating margin and 22% debt ratio. The share price saw a high of £2 in February from a low of 64.5p back in August. 

Defence against the dark arts

Another company operating in this space is Aerospace and Defence group Cohort (LSE: CHRT). One part of its business is cybersecurity and secure networks, operating under its MASS subsidiary. MASS works with law enforcement agencies ensuring critical and sensitive information infrastructure is protected.

The independent technology group has five divisions, but a sixth is in the pipeline as it’s in agreement to purchase naval sonar systems provider ELAC Nautik by the end of June. ELAC focuses on defence exports bringing Cohort into the German domestic market. 

The Cohort share price is up 45% in the past year, although it has dropped year-to-date. The company has a P/E ratio of 42. It offers a 1.6% dividend yield and EPS are 13p. From the March stock market crash, the Cohort share price fell 21%. It has now regained 28%.

Are these good tech stocks?

Privacy is something increasingly lacking in modern society. With our thoughts, conversations and actions taking place more publicly than ever before, this lack of privacy makes us vulnerable to exploitative behaviour. As time goes on, I think more and more people will strive to protect their privacy. This will increase demand for the necessary technology. Likewise, businesses will want to protect their data and personnel.

These cybersecurity stocks are listed on AIM and I believe a £500 investment in either of them would be a good addition to a Stocks and Shares ISA. I think both these tech stocks are a good buy, but be mindful they are speculative buy too because each P/E is very high.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has recommended Cohort. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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