Having crossed half way through this year, if we look back at the top performing and successful ETFs so far, ISE Cyber Security ETF (HACK) will surely deserve a mention. Probably no appreciation would be enough for the success of this barely six-month old cyber security ETF.

The fund has garnered $1 billion in assets so far and returned over 25%. After all, the product deals with one of the fast-growing and high-potential corner of the broader technology space – cyber security. We all know that technology has been a great boon to mankind, but it has lugged with it the many ills of ‘cyber-crime’.

Enterprises and government agencies constantly face cyber-attacks and are always in the want of rigorous cyber security to fight hackers. Per the Center for Strategic and International Studies and McAfee, cyber crime is a fast expanding industry with high returns and low risks. Their study projects that cybercrime costs the world over $400 billion per year (read: Guide to Internet ETFs).

Also ‘Key Findings from the Global State of Information Security Survey 2015’ by PWC indicated that cyber security instances increased at a CAGR of 66% from 2009. These data clearly explain the impressive performance by this product. There are 30 stocks in the fund. Let’s take a look at the five best performing stocks that made the fund’s north-bound journey possible:

Five Best Performing Stocks of HACK

CyberArk Software Ltd. (CYBR) – The stock takes the top position in HACK with 6.04% exposure. CYBR has been marching higher, having returned a stellar 80% in the year-to-date time frame and 40% in the last three month period. CyberArk Software currently carries a Zacks Rank #2 (Buy) and has Growth Style Score of ‘B’.

The stock is presently trading above its short-term (9 day) moving average. A relative strength index of 63.54 also indicates that it is yet to enter the overbought territory. A strong Zacks Rank and favorable technical indicators suggest possible future capital gains.
Its projected sales growth for fiscal 2015 is 34.92% compared with 8.43% projected for the industry. However, investors should note that the stock is not fit for value plays with a Value Style Score of ‘F’. 

FireEye Inc. (FEYE) – This stock comes in the second position of HACK with 5.88% allocation. It has advanced over 68% so far this year and about 25% in the last three months. The stock has a Zacks ETF Rank #3 (Hold) and a Growth Style Score of ‘C’.

The stock is in news now. Earlier this month, the company entered into an agreement with Visa Inc. (V) to set up measures and services which will help businesses in safeguarding the payment data from severe cyber attacks.
 
Projected sales growth for this stock is 47.73% (for fiscal 2015) against the industry average of 15.33%. This stock has seen its 9 Day SMA (simple moving average) surpassing its 50 Day and 200-Day SMA, suggesting short-term bullishness. However, the stock has a relative strength index of 79.32 indicating the stock is about to enter the overbought zone. So, investors need to tread cautiously while playing this stock.

AVG Technologies N.V. (AVG) – This Zacks Rank #1 (Strong Buy) stock is the six position holder in the fund. It offers relatively sound value characteristics compared to the above two with Value Style Score of ‘C.’ AVG is up over 40% this year and added over 24% in the last three month.

Investors should note that while the company’s projected sales growth for 2015 matches with the industry average of 15.33%, it scores higher on price/cash flow ratio (P/CF). This value indicator (P/CF) comes at 11.49 for AVG while industry has the ratio at 25.60.

Like other two, AVG has strong technical indicators with short-term moving average riding past the long-term, but relative strength index stands at 79.96.

Imperva Inc. (IMPV) – This stock occupies the ninth position in the fund with 4.36% exposure.  This Zacks Rank #3 stock has returned about 35% in the year-to-date frame and soared a staggering 55% in the last three month period. Imperva also has strong technical indiactors. It has a solid Growth Style Score of ‘B.’ Its projected sales growth of 25.51% exceeds the broader industry projection of 7.22%.

Palo Alto Networks Inc. (PANW) – This stock occupies the fifth position in the fund and returned over 24% in the last three month period. The stock is up over 47% in the year-to-date frame. It has a Zacks Rank #3 (Hold). Investors should especially note that the stock’s underlying industry stays in the top 30% segment of the Zacks Industry Rank at the time of writing.  Like most cyber security players, Palo Alto too is a growth play with Growth Style Score of ‘B’.

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