Profit Pregame

Why the Biggest Impact from the Pipeline Hack Won’t Be in Energy

The Latest Cyberattack Could Be a Huge Catalyst for One Industry

A hack on a critical oil pipeline is driving oil prices up, but that’s not where the biggest money will be made.

What’s happening?

In what seems like a plot ripped from a James Bond movie, news began to swirl yesterday that the largest pipeline in North America has been the victim of a cyberattack that’s devastating oil supplies in parts of the U.S.

The Colonial pipeline moves more than 100 million gallons of fuel a day from Houston to New York and is responsible for providing roughly 45% of the east coast’s fuel. Since Friday, the pipeline has been largely inoperable after a group of hackers initiated a ransomware attack – which locks users out of their computer systems until a fee is paid.

As Colonial works to get its systems back online, we’re already starting to see a massive oil supply crunch in the U.S.

And while investors may immediately think of rising gas prices due to the hack – especially as travel demand is beginning to increase – I’ve got my eye on another industry that’s likely going to see an even bigger and more profitable impact.

Where’s the money?

After news broke yesterday about the pipeline’s shutdown, it wasn’t long before panic buying started to take place due to fears of shortages and rising prices.

As a result, gas stations across the southern U.S. were already reporting being sold out by Monday evening. Among the hardest hit states are Virginia, North Carolina, South Carolina, Georgia, and Florida. Demand reportedly increased by more than 40% in those states.

The shortage could not have come at a much worse time. As the summer months are approaching and more and more Americans are being vaccinated, travel demand is starting to boom.

And as many traders pile into energy stocks with the combination of high demand and rising oil prices, I believe there’s another industry you should be putting money into – one that will end up seeing from greater profits from this latest ransomware attack.

How do I get some?

In the end, I believe the hack on Colonial pipeline will be a small blip on the energy market

Colonial Pipeline Co. has already said that it is manually operating a portion of the pipeline running from North Carolina to Maryland, and they expect to restore all service by the weekend.

But the attack is a real wakeup call for all manner of companies – and even governments – across the globe. It exposed how breaches in computer systems of critical infrastructure can create catastrophic problems.

We’ve already seen a massive data breach in the past year with the SolarWinds attack. Entire cities like San Francisco, Baltimore, and New Orleans have been targeted by hackers. And now, critical industries are being targeted.

All of this is placing the important of having strong cybersecurity systems in place in the limelight.

But while cybersecurity is one of the hottest industries right now, it is also the most saturated.

I think there will be more takeovers in this space as the top cybersecurity firms vie for market share.

My favorite name in this space is still FireEye, Inc. (FEYE), which has already garnered headlines for stepping in to assist with the investigation of the Colonial pipeline hack.

Fireye is a cybersecurity company that provides hardware, software, and services to investigate cybersecurity attacks, protect against malicious software, and analyze IT security risks. And it’s been involved in the detection and prevention of many major cyberattacks.The company’s growth has been incredible, and I only expect it to continue as many businesses continue the work-from-home environment. So, I’ll be looking to invest in this company, setting myself up to profit off their next significant acquisition before it even hits the headlines.

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In the Spotlight:

Palantir Technologies Inc. (PLTR) – a software designer that specializes in government contracts in counterterrorism and intelligence – recently posted a solid Q1 earnings report that beat expectations for revenue growth.

Palantir’s biggest surprise came from the announcement that it will now accept Bitcoin as payment from its clients.

Co-founder Peter Thiel also said that Palantir was considering adding Bitcoin to its balance sheet.

The announcements shouldn’t come as too much of a surprise, considering Thiel’s other companies – PayPal and Venmo – have both already embraced cryptocurrency.

But the move is another in a line of actions that are bringing the digital market further into the mainstream while adding intrinsic value.

I espoused my belief in Bitcoin, Ethereum, Iota, and other cryptos here in Profit Pregame before. This latest announcement solidifies my belief that cryptocurrencies continue to have a bright future.

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