Took another bath in tech stocks this year, did ya?
Well, as you towel off those losses, consider this. Several tech stocks bubbled in the overall economic bath this year — without ever bursting. While some of the winners might have been obvious choices, others are companies that you might have bet would go down the drain in 2001.
In any case, if the stocks below match the portfolio you had on January 1st of this year, drop us a line. We’d like to buy your crystal ball.
Curb the Lights
Among lesser known lights, online advertising company Overture (Nasdaq: OVER) — formerly GoTo.com — has seen its shares more than double in value this year, even as other online marketers have fallen by the wayside.
Instead of charging flat fees, Overture charges advertisers when consumers click on their listings. The company’s shares closed Friday at US$25.55, up from $7.31 at the start of the New Year.
Overture’s success shows that “Internet advertising is not dead,” US Bancorp Piper Jaffray analyst Safa Ratschy told the E-Commerce Times.
“It is still a real business, but not the way people envisioned it,” Ratschy said, adding that the stock’s rise this year shows that “if you have a good business on the Internet, it can be hugely profitable.”
Held in EBayance
That idea is also behind the rise in EBay shares (Nasdaq: EBAY) so far this year, analysts say. Among e-commerce players, EBay is widely viewed as a smart outfit that found a niche market and capitalized on it.
EBay shares have risen from $33 at the start of the year to $68.07 as the company continues to expand.
The company’s “unique business model” has allowed it to leverage its core technology to grow into “one of the very few” model companies in the Internet business, said Ratschy.
Round the World
Other e-tail stock gainers have also been able to find niche markets and manage costs, said Ratschy. Those that sell products like flowers, financial services and travel have low overhead and are better able to sell their wares online than a company selling refrigerators, for example.
Even after retreating following the September 11th terrorist attacks on the United States, travel sites Expedia (Nasdaq: EXPE), Travelocity (Nasdaq: TVLY) and Priceline (Nasdaq: PCLN) are all higher than they were at the start of the year.
Expedia jumped from $9.56 on January 1st to $35.82 Friday, Travelocity improved from $12.13 to $21.32, and Priceline rallied from as low as $1.31 to $4.20.
Another winner is pet-product seller Petsmart (Nasdaq: PETM), which operates brick-and-mortar stores as well as its popular Web site. Petsmart is trading at about $8.77, up from $2.88 in January.
Overall, “we probably have hit the bottom on Internet stocks,” Ratschy said. “The ones that are remaining probably have been cleansed of the dot-com revenues, so we’re dealing with survivors.”
Companies that serve other businesses — like enterprise software makers and contract manufacturers — have also outperformed most old-line technology companies as cash-strapped corporations outsource operations to save money.
For example, Nvidia (Nasdaq: NVDA), which provides multimedia processing technology, is trading at $54.64, up from $16.39 at the start of the year. As of November 29th, Nvidia will be listed on the S&P 500 Index, replacing Enron (NYSE: ENE).
Computer makers had a roller-coaster year, but two big names posted strongly positive returns: Dell (Nasdaq: DELL), up 60.2 percent to $27.93, and Apple (Nasdaq: AAPL), up 43.2 percent to $21.30.
Signs of Recovery?
Other tech service sectors have also performed well. Standard & Poor’s index of office electronics stocks, which includes Xerox (NYSE: XRX), is up more than 20 percent this year. Xerox started the year at $4.59, but closed on November 30th at $8.40.
Information technology consulting and services stocks have eked out a 3 percent gain, and semiconductor equipment shares are up 7 percent. By contrast, the index of computer storage and peripherals is down 69 percent, and telecom equipment shares are down 55 percent.
S&P analyst Sam Stovall told the E-Commerce Times that the gain in semiconductor equipment shares might be an early sign of an overall tech recovery, though a trend has not been established. The group is “the one that tends to peak before the others, but also trough before the others,” Stovall said.
“A lot of analysts and investors are saying if this economy is bound to turn around sometime in 2002, it is likely to be led by these early cyclical areas such as the semiconductor equipment industry,” Stovall said.
So what is the bottom line on what might have been?
- $1,000 in Overture on January 1st became $3,495 on December 1st.
- $1,000 in EBay on January 1st became $2,063.
- $1,000 in Expedia on January 1st became $3,747.
- $1,000 in Travelocity on January 1st became $1,758.
- $1,000 in Priceline on January 1st became $3,206.
- $1,000 in Petsmart on January 1st became $3,045.
- $1,000 in Nvidia on January 1st became $3,334.
- $1,000 in Dell on January 1st became $1,601.
- $1,000 in Apple on January 1st became $1,432.
- $1,000 in Xerox on January 1st became $1,830.
The total? A $10,000 investment in these stocks at the end of 2000 would have been worth $25,511 today — an increase of 155.1 percent.
If it makes you feel any better, think of the tax bill that would come with that kind of profit. Who needs it, right?