Ukraine Investing Outlook From GlobalX

• Russia could reportedly use cyberattacks in its assault on Ukraine, according to reports.
• Global X's director of research Pedro Palandrani told Insider that cybersecurity stocks will experience accelerated growth as the conflict continues.
• Insider breaks down Palandrani's top three cybersecurity stock picks.

As Russia continues to escalate its ground invasion of Ukraine, it could soon turn to one of its go-to methods for creating chaos - cyberattacks.

The eastern European country has developed a reputation as one of the world's most prominent cyber-aggressors in recent years. Suspected Russian hackers took down Ukraine's power grid in 2016, and launched another damaging cyberattack that wiped data from banks, government computers, and energy firms the following year.

Goldman Sachs also recently estimated Russia is responsible for two-thirds of all global state-sponsored cyberattacks. As a result, top stock pickers are pointing to cybersecurity as a sector that could experience accelerated growth during the Russia-Ukraine conflict.

"The Ukraine crisis brings everything in this sector into the spotlight," Global X's director of research told Insider in a recent interview. "Whenever we see a conflict there's greater spending in the sector, so cybersecurity stocks are receiving unprecedented attention right now."

Global X manages over $40 billion of assets and runs 91 ETFs. An ETF, or exchange-traded fund, tracks a specific sector, theme, or investing strategy. Global X's Cybersecurity ETF, which trades on the Nasdaq under the ticker BUG, manages over $1 billion.

Stocks to buy

Palandrani said the cybersecurity sector had been surging even before Russia launched its full-scale invasion of Ukraine. The US government pledged to spend $9.8 billion on the industry in its 2022 budget, which he said was creating significant investing opportunities.

In a prominent attack last year, cybercrime group DarkSide used ransomware to extract $4.4 million from the gasoline and jet fuel carrier Colonial Pipeline.

"Cybersecurity has been top of mind for investors for a while now," Palandrani said. "We've seen a lot of emphasis on it in the US - the government has committed to spend billions of dollars to try to prevent attacks that debilitate the supply chain, like the Colonial Pipeline attacks."

Palandrani highlighted three pure-play cybersecurity stocks to buy to take advantage of a potential rally. All three are owned by the BUG ETF.

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