Analysis of the Cyber Security ETF (NYSEARCA:HACK) and Its Components

Components of HACK (in order of % of total holdings):

  • CYBR
  • FEYE
  • QLYS
  • PFPT
  • SPLK
  • BLOX
  • FTNT
  • PANW
  • AVG
  • JNPR
  • CSCO
  • SAIC
  • IL
  • CHKP
  • CUDA
  • VDSI
  • SYMC
  • IMPV
  • KEYW
  • RDWR
  • XLS
  • WYY
  • MANT
  • ZIXI
  • GUID

HACK is up almost 10% YTD, with the bulk of their gains coming in the past 2 weeks. HACK is a relatively new ETF (began trading in Nov ’14), and tracks about 30 securities in the high-growth cyber security space. HACK has run-up big during the past few trading sessions, and I think its going to pull back to the $27.40-$27.60 range before moving higher. There’s no doubt that cyber security is becoming a hot sector (remember FEYE’s 250% move early last year?), and this will eventually lead to an influx of cyber security IPOs (list of Cyber Security software companies in the IPO pipeline here:

My Favorite Picks from the HACK ETF:

CYBR: CyberArk has nearly doubled since the end of January, and even with its sharp decline today I believe its going to keep moving down until it hits the mid-high $40s, then it should continue higher.

QLYS, PFPT, and BLOX: I like Qualys, Proofpoint, and Infoblox here. QLYS and PFPT are in solid uptrends have annual top-line growths of 33% and 45%, respectively. BLOX is retesting its 6 mo. high for the third time in the past 3 months right now, and if it breaks above $21 it should make for a nice swing trade.

IMPV & CUDA: If Imperva and Barracuda Networks break above $52.30 and $40.40, respectively, they should have no problem running up another 20-30%.

PANW: Palo Alto Networks has been one of the best-performing stocks in both 2014 and 2015. It seems as if it will never go down; I’d consider buying some here just to ride this mega uptrend.

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