Has MYR Group (MYRG) Outpaced Other Utilities Stocks This Year?

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Analysis

The visible increase in client-side bot blocks and anti-bot friction is a demand shock that flows beyond traditional security vendors: merchants face measurable conversion drag (industry A/Bs suggest mid-single-digit percentage hit when false-positives rise), data-scraping pipelines get throttled within days, and enterprises accelerate server-to-server tracking or licensed data purchases within quarters. That shift boosts edge compute and S2S telemetry spend (more requests routed through CDNs and cloud functions) while simultaneously creating an addressable market for curated/licensed training datasets for AI players.

Second-order winners include CDN/edge providers and cloud-native bot-mitigation stacks which monetize both prevention and the new routing patterns; losers include small programmatic adtech and analytics players that cannot absorb higher verification/identity costs and will see margin compression. Over 3–12 months expect an elevated cadence of product changes (bot policy tuning, CAPTCHA inflation, server-side APIs) that redistributes revenue from click-level ad attribution toward identity-resolution and data-licensing vendors.

Key catalysts and risks: near-term catalyst is merchant A/B response — a reproducible ~2–8% conversion decline will force either policy loosening or compensating UX changes within weeks; medium-term catalyst is regulatory action against fingerprinting/cookie-replacement (6–24 months) which could remove behavioral targeting upside and push advertisers to contextual buys. Tail risks include a large false-positive episode across a major e‑commerce platform (days–weeks) that precipitates lawsuits/regulatory scrutiny and forces vendors to offer indemnities or SLAs, compressing margins.

The consensus trade — ‘‘security vendors only win’’ — misses commoditization risk and the emergence of a parallel monetization path: licensed/curated datasets for AI and identity resolution. That implies a blended trade: own scalable edge/security platforms while hedging pure-play adtech exposure and keeping optionality on data-marketplace companies that can sell permissioned web data to LLMs and analytics houses.

Key Decisions for Investors

• Long NET (Cloudflare) via 9–12 month call purchase (size: 2–4% portfolio). Thesis: edge compute + bot management revenue accelerates with more S2S routing; target +30–50% upside if adoption and pricing power hold. Pain point: competition and multiples compression — cap losses to premium paid, tighten if quarterly guide misses.
• Pair trade: long AKAM (Akamai) vs short CRTO (Criteo) over 6–12 months, equal notional. Rationale: Akamai benefits from incremental CDN/S2S demand and enterprise SLAs; Criteo is exposed to programmatic spend loss and higher verification costs. Risk/reward: aim for 20–40% relative spread; stop-loss if macro ad spend rebounds >10% QoQ.
• Buy PANW (Palo Alto) 12–18 month calls (smaller size, 1–2% portfolio) as protection exposure to enterprise cloud-security replatforming. This hedges systemic cyber spend normalization while retaining upside from consolidation if margins remain sticky.
• Event hedge / tactical: allocate a 0.5–1% notional to short small-cap adtech or measurement equities (examples: CRTO or other single-digit cap adtechs) on any quarter with guidance downgrades tied to tracking disruptions. Exit within 3–9 months or on signs of durable server-side monetization by adtech incumbents.