On Monday, Check Point Software’s (NASDAQ:CHKP) stock hit a 10-year high from a strong profit report, and has risen 88% in the last year. Thanks to rising demand for its products resulting from well-publicized hacking attacks at Sony (NYSE:SNE), eBay (NASDAQ:EBAY) the Central Intelligence Agency, and the Pentagon, Check Point raised its 2011 earnings-per-share forecast from $2.75 to $2.84.

Here are three other reasons to own its stock:

• Out-earned its capital cost — at an accelerating rate. Check Point earned more operating profit than its cost of capital, and it’s gaining ground fast. Check Point’s EVA momentum, which measures the change in “economic value added” (essentially, profit after deducting capital costs) divided by sales was 11%, based on the first six months’ 2010 annualized revenue of $1 billion, and EVA that rose from $145 million annualizing the first six months of 2010 to $261 million annualizing the first six months of 2011, using an 8% weighted average cost of capital.
• Excellent second-quarter earnings. Check Point’s second-quarter net income climbed 24% to $128 million — beating nine analysts’ consensus estimate of $125 million. Its EPS of 68 cents beat expectations by two cents. Its operating margin widened from 46.7% to 50.1%. And Check Point’s revenue of $301 million was 15% higher than in the previous year.
• Rapid growth and solid balance sheet. Check Point has grown quickly. Its revenue has increased at an average rate of 13.6% over the last five years, and its net income has risen at a 7% annual rate over that period. And its cash has remained constant at around $1.1 billion with no debt.

One problem is that Check Point is an expensive stock. Check Point’s price-to-earnings-to-growth (PEG) ratio of 2.53 makes it overvalued (a PEG of 1.0 is considered fairly priced). Check Point’s P/E ratio is 26.6 and its earnings are expected to grow 10.5% to $2.91 a share in 2012.

The best justification for buying this stock is that if its earnings keep growing at 24% or more, then its current stock price will look reasonable. This is one stock that has good odds of continuing to grow fast because highly publicized hack attacks seem to be growing. And this will just boost demand for its products.

Peter Cohan has no financial interest in the securities mentioned.