Besecker's Three Cyber-Security Stock Picks

Joe Besecker, chairman, president and CEO of Emerald Asset Management, Inc., the parent company to Emerald Advisers, founded Emerald in 1991. Headquartered in Lancaster, Pa., the company currently has more than $2.8 billion in assets under management.

Besecker is a frequent guest with Dagen and Connell on the 11 a.m. ET hour of Markets Now and Wednesday shared his stock plays in the cyber-security arena.

1. SourceFire (FIRE)

Market Cap: $1.3 billion A leader in cyber-security for large enterprise and government.

Why Emerald thinks SourceFire could grow significantly from here:

Everyone is under attack: The threat environment for cyber-attacks in both enterprise and government will only get worse
Government: Spending concerns related to the Federal Government has investors too cautious. It is pretty clear that the federal government is the highest priority and they are going continue to spend.
New Product Cycle: SourceFire is in a strong upgrade cycle in terms of both new hardware and NextGeneration Firewall
Better Distribution: SourceFire is generating significant sales leverage from its investment in 3rd party channels
Company reports Thursday Night: We think that the company has the ability to grow faster than current expectations for both Q412 and the 18% estimate in 2013

DISCLOSURE: BOTH JOE BESECKER AND EMERALD ASSET MANAGEMENT OWN THIS STOCK

2. Cavium (CAVM)

Market Cap: $1.9 billion A leader in cyber-security for large enterprise and government. Cyber-security hardware/semiconductors - Cavium produces multi-core processors that enable communications, networking, and security applications

Why Emerald thinks Cavium can grow higher than Street estimates:

Good growth prospects: Cavium is an emerging player in processor solutions for next-generation data centers BYOD and the Cloud have unique security issues:
BYOD and the Cloud have unique security issues:
End-devices mix personal and business data and may not have the security systems (or the processing power to run them) Current methods of scanning for known attack patterns does not thwart new attacks
Current methods of scanning for known attack patterns does not thwart new attacks
New security technology: Traditional data centers put firewalls at their borders. Modern cloud applications involve communications between virtual machines within a data center.There is now a need to secure physical and virtual traffic and enforce security policies in a multi-tenant server

DISCLOSURE: EMERALD ASSET MANAGEMENT OWNS THIS STOCK

3. Fortinet (FTNT)

Market Cap: $3.7 billion Leader in Unified Threat Management (UTM).

Why Emerald thinks Fortinet could grow significantly from here:

Simply put, UTM appliances are network Security product which does multiple things (network firewall, anti-spam, data leakage) on one hardware platform that sits on the edge of a company’s network.
The UTM market is well positioned to grow as companies look to consolidate multiple security into a single appliance
Posted strong Q412 results and continues to see increases purchase by large enterprise demonstrates the strength of the company’s offering
Taking share from both Cisco and Juniper
Despite the macro environment, Fortinet is demonstrating healthy growth across its three primary geographies.

DISCLOSURE: EMERALD ASSET MANAGEMENT OWNS THIS STOCK

4. Besecker's Bio

Chairman, President and CEO of Emerald Asset Management, Inc., parent company to Emerald Advisers
$2.8 billion in assets under management.
Founded Emerald in 1991
20 years experience in the money management business
Started career as an investment professional with Merrill Lynch and E. F. Hutton
Provided expertise to a number of early-stage venture capital projects
An initial investor and provided advisory support to BlackLight Power, Inc., The Investor Broadcast Network, and Auction Inn
Recognized for achievements in the venture capital community with nominations as a finalist of both the Ernst & Young Entrepreneur of the Year Award and Enterprise Entrepreneur of the Year Award
Named as a Home Run Hitter by Institutional Investor magazine
Invited to lecture at Oxford University in 1998, discussing his extensive work on the Year 2000 problem