Tech stocks are finally working to redeem themselves from the 2000 tech-stock bubble.
While the broad market stumbles out of its credit-induced stupor that started in 2007, tech stocks ironically are one of the areas of strength by being fiscally sound. “Tech companies took a conservative posture,” says Ryan Jacob of Jacob Internet fund. “Tech has been a place you could see some growth without as much risk.”
As a result, tech stocks are:
*Beating the other benchmarks by a mile. The tech-heavy Nasdaq composite is up 16.4 percent this year, trouncing the 3.8 percent drop by the Dow Jones industrials and 1.8 percent gain of the Standard & Poor’s 500. The Nasdaq’s 45 percent rise from the March 9 bottom and 20 percent gain during the second quarter also outshine the S&P and Dow during the same period.
*Topping the sectors. The tech sector is up 28.8 percent over the past six months through Monday’s close, says Capital IQ. Tech’s rise this year tops the runner-up, materials, and its 18.6 percent gain.
*Finding a varied supporting cast. It’s not just one barnburner tech stock lifting the tech indexes. Of the 50 best S&P 500 stocks this year, 14 hail from the information technology sector, says Capital IQ. Only one other sector comes close, consumer discretionary, also with 14. But one of those top consumer stocks is online retailer Amazon.com, considered a tech by some.
*Finding leadership within leadership. Internet stocks are doing even better than tech at large. The USA TODAY Internet 50 is up 27.2 percent this year and the e-Consumer 25 subindex 34.2 percent.
Investors have been keen on tech stocks, especially during the worst of the credit crunch, largely because the companies have been reluctant to use debt. “These businesses produce so much free cash flow, there’s no reason to go out and…