Today, as promised, I'm going to give you additional insights into cyber security companies, including some new analysis that Mike Larson and our Weiss Stock Ratings team have just given me.

But first, let me tell you where I was last weekend: I revisited a small farming community of Japanese immigrants in Brazil, where I had done my fieldwork as a cultural anthropologist 43 years ago.

At first blush, Japanese in Brazil may seem far removed from the global conflicts and cyber warfare that we've been writing about recently. And they are.

But as I explained to the immigrants' grandchildren when I stopped by their classroom on Saturday, there's a very important theme that underlies both their legacy and ours:

In both contexts, adversity and calamity have been the fountains of ingenuity and originality.

You see, like the global economy of recent years, this little community has suffered through one catastrophic crisis after another — a series of booms and busts that destroyed their livelihood, drove many into financial ruin, and bankrupted their agricultural cooperative.

But each time, they found a new crop, a new technology, a new pathway to prosperity. And each time, the surviving families emerged smarter, more united, and better off financially.

Someday, the same will also be true for the disastrous events we see unfolding globally right now.

It could take a long time. And before it gets better, it's bound to get worse. But …

Ultimately, the extremists in the Middle East will self-destruct. The greater their brutality, the more the people under their domain will rebel. The bigger their victories, the more they will drive America's allies — and enemies — to unite against them.

Ultimately, we will see a similar pattern in the escalating battles between East and West: The conflicts will reach a crescendo. They will help wipe away bad habits, bad debts and heavy burdens of the past. Then they will help usher in a new era of stability.

And soon, the same will be true for the cyber threats I told you about last week, which leads me to …

The Coming Revolution in Defense Spending

This is the one area where we can already begin to discern the light at the end of the tunnel.

You see, until now, almost all of America's military and defense spending has been based on the assumption that warfare would be fought on the battlefield or from the sky.

Even excluding the money spent directly on wars themselves, the Pentagon's total budget for fiscal year 2015 was $496 billion.

That's a lot of money. And the overwhelming bulk of it is going into hardware, operations and personnel that will probably never be used.

But right now, only $12 billion, or a meager 2 percent of the total non-war defense budget, is for science and technology (S&T).

And within the S&T budget, only $900 million is earmarked to "operate effectively in cyberspace and space."

As cyber threats heat up, all it would take is a shift of 10% of the Pentagon's budget, and suddenly the cyber defense spending would grow 55-fold to nearly $50 billion.

Meanwhile, across all segment of the U.S. government (military or otherwise), the cyber security budget is $10 billion per year, and President Obama wants to boost that to $14 billion for fiscal 2016.

Whether Congress will give him all that money or not remains to be seen. But the private sector isn't waiting around for anyone's approval. They're already spending $65 billion per year on cyber security and are in the process of ramping that up dramatically.

All told, in the U.S. alone, that's a minimum of nearly $80 billion in cyber security spending in the works, with a heck of a lot more on the way.
Here's the most interesting aspect: You can count on your fingers the number of listed companies with the talent and infrastructure to do something useful with all that money.

So the challenge is to find companies that have BOTH:

a long enough history for us to opine on their financial stability AND

enough focus on cyber business so that investors don't wind up buying into everything from soup to nuts.

Here are a few examples of the leaders, and as you'll see, they don't necessarily meet all of our criteria …

Booz Allen Hamilton Holding (BAH)
(Weiss Stock Rating: B)

This company has come a long way since 1914 when economist-cum-psychologist Edwin G. Booz borrowed $500 and founded his research consulting firm.

Today, it's the largest in the cyber-security field with 22,000 employees, providing services designed to improve intelligence analysis, counterintelligence, security, and efficiency — mostly for the government.

In fiscal 2014, for example, the company got 49% of revenue from the Pentagon, 26% from U.S. Government intelligence agencies, and some of the balance from other government agencies. That's a big focus on government, with all its pros and cons.

One of its top-ranking advisors: Mike McConnell, formerly Director of National Intelligence under George W. Bush and a man who seems to see the same cyber security threats we've been writing about.

His primary concern: Cyber attack teams operating out of China, which, he says "have penetrated every major corporation of any consequence in the United States and taken information."

He's right.

But, like us, he and the firm are also worried about the Middle East, especially the Persian Gulf area, where their enemies are penetrating oil and gas companies with dangerous Internet viruses. Result: The company is expanding its operations to the region in a big way.

Meanwhile, the company's stock has already been on an upward rampage, nearly tripling in value since early 2013.

After such a dramatic run-up, our Money and Markets team is not recommending you rush out and buy its shares immediately. But with a Weiss Stock Rating of "B" (meaning "good"), it's definitely on their radar screen.

FireEye (FEYE)
(Weiss Stock Rating: D)

Even though this company has a D Rating (weak), it's a cyber-security leader with products that find and exterminate malicious software (malware) and fend off Internet attacks.

Much like McConnell at Booz Allen, FireEye CEO Dave DeWalt doesn't mince words about the cyber threats — let alone about the impact they're having on his business.

He says the threats are enormous. And he points out that recent publicity over cyber attacks — against JPMorgan Chase, health insurer Anthem, and media company Sony Pictures — is causing business to grow "exponentially." Just in the last year, the firm expanded its client list by 1,000, doubling its business in the process.

One problem for the near term: FireEye is spending too much money — $1 billion to buy Mandiant Corp. in 2014, more money to expand its reach among Defense Department suppliers, plus still more to open security centers in Singapore and Australia, soon to be followed by locations in Japan, Germany, and the Middle East.

The consequence: The company lost $105.7 million in the most recent quarter. But revenue more than doubled to $143 million from $57.3 million, topping analyst projections.

Lockheed Martin (LMT)
(Weiss Stock Rating: B+)

Here's a case of a strong company with plenty of history and a very good Weiss Rating — but also a lot of revenues that have little or nothing to do with cyber security: Fighter jets, combat ships, missiles, satellites, and other aerospace/military hardware.

However, cyber security is a fast-growing contributor to the firm's top and bottom lines, with energy, pharmaceutical, and finance companies clamoring for the company's know-how to protect their businesses from hacks and attacks.

Six years ago, the company created the Lockheed Martin Cyber Security Alliance to help members collaborate on "early threat detection, protection, and multi-layer self-healing capabilities."

And, with the company's commanding presence, it was able to attract big names into the membership — APC, Cisco, Dell, HP, Intel, Juniper Networks, McAfee, Microsoft, Verizon, NetApp, VMware, Symantec and others.

The benefits, in terms of the pooling of intelligence and the unique platform it gives Lockheed, are incalculable.

But until their cyber division represents a much larger share of their business, Lockheed still has to be classified mostly as aerospace, not cyber security.

Palo Alto Networks (PANW)
(Weiss Stock Rating: C-)

Here we have another great up-and-coming player in the cyber security business.

It has big corporate and government customers around the world.

It has strong products like its Next-Generation Firewall, Threat Intelligence Cloud, Panorama, and Virtual System Upgrade to help services help protect against Internet threats.

But at "C-" it's Weiss Stock Rating is barely "fair," reflecting a so-so financial history.

Most recent results are far more promising: Earnings jumped 90% to 19 cents per share in the fiscal second quarter that ended January 31, beating estimates of 17 cents.

Meanwhile, sales surged 54% to $217.7 million, also well ahead of estimates of $204 million.