Idaho, China, Menlo Park. That would have been your itinerary this year to find the tech stocks that make up the list of the best-performing names of 2013. These are stocks that have doubled or even tripled their investors’ money and, while some have likely exhausted the easy gains, others are expected by Wall Street analysts to continue soaring. And can you believe good old Yahoo! came in at number 10? It’s not growing that much but investors have realized the rising value of its approximately 24% stake in the Chinese e-commerce firm that is heading toward a huge IPO in 2014.
Forbes stats editor Scott DeCarlo and I screened close to 400 publicly traded technology stocks, cutting off the list for this ranking’s purposes at stocks that ended the year with a market cap under $5 billion. That excluded a bunch of well-known names that did extremely well in 2013 including Yelp (up 261%), Shutterstock (up 223% post-IPO), and WebMD (up 168%), as well as much of the solar sector, which had a terrific comeback this year with SunEdison up 298%.
But cutting off at $5 billion also excludes a lot of small-cap fliers and tiny Chinese ADRs. Nothing against Chinese ADRs except that they are, well, Chinese ADRs. We than re-ranked the big-cap list by total return through December 20. That’s the not the end of the year, I know, but stocks tend to meander in late December so I doubt the picture will look different by New Year’s Day. If it does, sue me. I’ll have another post to write.
The Nasdaq composite index, the annual performance bogey for most tech stocks, delivered a 36% return this year. Seventy out of the 105 stocks over $5 billion in market cap beat the Nasdaq, but you’d have done better in absolute terms (but not in percentage terms) throwing darts at the smaller-cap names, where 165 stocks beat the Nasdaq out of 261 that we tracked.
The best-performing large-cap tech stock of the year? Micron Technology, the Boise, Idaho maker of random access memory and microprocessors. Forbes contributor and stockpicker David Steinberg liked Micron at the beginning of the year and reiterated that call in September, saying that consolidation has finally brought a modicum of pricing power to the memory chip industry, and Micron is one of the few survivors. Demand is on the upswing and Micron has also put behind it the drag of an ongoing patent lawsuit with Rambus.
- Micron Technology, up 250%
- SouFun Holdings , up 218%
- Pandora Media, up 205%
- Qihoo 360 Technology, up 165%
- 3D Systems, up 119%
- Splunk, up 139%
- T-Mobile, up 137%
- Facebook, up 107%
- CoStar Group, up 105%
- Yahoo!, up 101%
At number two is SouFun, China’s biggest real estate Web portal. It makes money from property listing fees, ads and operating home improvement websites. The company has coverage in more than 320 cities in China with a big, active community of home buyers and sellers, as well as investors and property developers. Revenue in the most recent quarter was up 45% and operating earnings per share was up 66%. The stockpickers at Zacks likes next year’s growth prospects, recently raised to 35% growth from this year.
At number three is Pandora, whose shares nearly tripled in 2013. Few might have guessed they would perform that well, given how tough it is to make money in digital music streaming. But investors woke up to Pandora’s mighty position with 70% share of Internet radio and 71 million monthly active users. Advertising, which accounts for 80% of revenue, will hit $643 million this year. Mobile ad sales topped $100 million for the first time in the third quarter of 2013, making Pandora third in mobile ad revenue behind only Google and Facebook. Musicians aren’t happy about it, but Pandora is renegotiating (likely downward) its royalty rates with artists, labels and music publishers sometime early next year.
One of the big takeaways this year was the underperformance of most of the biggest names in tech. Apple came in dead last among the big-cap stocks, up a mere 5.7%. Also bringing up the rear were Cisco (up 10%), AT&T (up 7%), Verizon (16%), Oracle (10%) and Qualcomm (20%).
You might be wondering, “Where’s Netflix?”. Some consider it a tech stock, and it quadrupled in price in 2013, making it the best overall performer in the S&P 500, but in our industry categorization it falls under media stocks.