ASX shares benefiting from growth trends can be smart buys if their earnings are being driven by an undeniable tailwind. The growth theme that I'm going to highlight in this article is cybersecurity.
The world is becoming increasingly digital as the years go by, with almost every sector seeing changes. Think about work, learning, communication, education, shopping, banking, filing tax returns, and more – many of these areas have changed significantly.
The more these activities occur online, the more important it is to protect users and core systems from cybercrime. Cybersecurity is a rapidly growing sector that can help tackle this problem.
Cybersecurity Ventures predicts that global spending on cybersecurity over the five-year period of 2021 to 2025 will be a cumulative total of US$1.75 trillion, representing year-over-year growth of 15%. I'd imagine almost every ASX share would love to say its industry is growing at 15% per year.
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Betashares Global Cybersecurity ETF (ASX: HACK)
This is an exchange-traded fund (ETF) that aims to give investors access to the world's leading cybersecurity companies. That includes both global cybersecurity giants as well as emerging players from different countries.
There are currently 32 businesses in the portfolio, which include names like Cisco Systems, CrowdStrike, Fortinet, and Okta. These companies are from a variety of countries, including the US, India, France, Israel, and Canada.
We don't necessarily need to pick which of these businesses will be the biggest winners – it's a diversified bet on the sector.
The HACK ETF has done well for investors over the long term – since August 2016, it has delivered an average annual return of 15.9%, which is a fantastic level of performance. But, past performance is not a guarantee of future returns, of course.
While management fees shouldn't necessarily have a significant impact on net returns, it's useful to know that management costs are an annual 0.67%.
Qoria Ltd (ASX: QOR)
Wilson Asset Management recently provided its monthly update about the listed investment company (LIC) WAM Microcap Ltd (ASX: WMI), which included ASX share Qoria.
WAM described Qoria as a business that develops cloud-based cybersecurity and child protection software for schools and families worldwide.
The fund manager noted that the Qoria share price fell in January as the market focused on profitability and diminishing cash reserves, despite promising growth metrics, such as annual recurring revenue (ARR) surpassing US$100 million and continued growth.
But the Qoria share price has since bounced back sharply after the ASX share received a takeover offer from Aura, which has agreed to acquire the ASX share at 72 cents per share.
But, gaining investment access to Qoria will not be disappearing from the ASX – Aura will give Qoria shareholders 1 Aura CHESS depositary interest (CDI) for every 17.2 ordinary Qoria shares they own. Qoria's shares represent, in aggregate, 35% of Aura.
The ASX share has a promising future of revenue growth, whether it's as a separate entity or part of a merged business.
