There have been some spectacular stock market performances taking place since the beginning of the year. Certainly the major change in investor sentiment helped at the beginning of September, but there’s still been some fantastic wealth creation going on and it’s been in technology.
Large-cap technology has mostly been in the doldrums. It’s only over the last few weeks that a lot of the big brand-name companies witnessed their stock prices move up. Recent good news from Hewlett-Packard Company (NYSE/HPQ) is good for large-cap tech and the broader market. Hewlett-Packard is a benchmark stock that reflects both the corporate and consumer economy.
One of the most powerful performances this year by a large-cap technology company has been from VMware, Inc. (NYSE/VMW). Pull up a one-year stock chart on this company and you’ll see a powerful 100% gain since the beginning of the year. And the gain has been consistent, which is always a plus for shareholders. You may not have heard of this software company, but business is a lot better these days.
On a smaller scale, salesforce.com inc. (NYSE/CRM) is another technology company that’s experienced a doubling of its stock price this year. salesforce.com sells technology that helps automate the relationships between a salesperson and a customer. This company has been a consistent grower for a number of years and so has the company’s stock price. Pull up a five-year stock chart on salesforce.com and you’ll see the wealth creation. Since the beginning of the year, salesforce.com has been a real sizzler. The stock’s 52-week low was about $54.00 a share, and it is now currently trading for just under $120.00 a share.
Finally, there’s SuccessFactors, Inc. (NASDAQ/SFSF). This smaller business sells workflow software, which consists of solutions that help businesses manage all their data regarding employees, human resources and training programs. I like this company’s name because it reflects the company’s financial growth. In 2007, SuccessFactors generated approximately 63.0 million dollars in sales, followed by 112 million dollars in 2008 and 153 million dollars in 2009. It looks like there’s no recession affecting this business. The company is just about to become profitable this year, with the expectation for 199 million dollars in total sales, and 250 million dollars in total sales in 2011. SuccessFactors stock blasted five points higher since the beginning of September to its current level around $25.00 a share. This stock is up tremendously since the middle of last year.
The surprise for me in analyzing these winning positions has been that they’re all in the software business. Perhaps the reason why the large-cap technology sector has been a laggard is due to slow sales in the equipment side of the business. Regardless, it’s great to see such wealth creation in an uncertain stock market. With these three companies’ track records of success, the future looks bright for them.