The technology sector is always hot when it comes to discussion among investors. Everyone is looking for the "next big thing", and many look to the tech sector and its history of breakthroughs and products for that golden egg. Although 2010 was not an eye-popping year for the sector as whole, especially when compared to the pre-bubble bursting years in the late 1990s, the sector as a whole did relatively well. It returned 11% for the year, as represented by the Technology SPDR ETF (NYSE:XLK). The sector did underperform the market as a whole, however, despite some huge returns from familiar names like Apple (Nasdaq:AAPL), Netflix (Nasdaq:NFLX) and salesforce.com (NYSE:CRM). However, 2011 is a new year, and more than a few tech stocks ended 2010 on a hot streak. Let's look at three such companies that hope to keep up their momentum heading into 2011.

IN PICTURES: World's Greatest Investors

Finisar Showing Momentum

The first and hottest on our list is Finisar Corp. (Nasdaq:FNSR). For those unfamiliar with the company, Finisar specializes in optical subsystems and components that connect a variety of networks, such as LANs, CATV and WANs. The Sunnyvale, California-based firm ended 2010 with a 27% increase in its stock price in December and an astounding 60% increase in the final three months of the year. These results were driven by record revenues and earnings in the company's second quarter earnings announcement in early December, with revenues increasing 65% over 2009 and a $65 million turnaround in earnings over the same period. Management is especially excited about the company's growth prospects in the WSS/ROADM line card segment, which saw revenues grow over 27% from Q1 and expect another 20-30% growth in the coming quarter. With expectations so high, it shouldn't come as a surprise that the stock trades at a P/E ratio of just under 35 and is just under its 52-week high. But if you're looking for a stock with momentum, Finisar definitely fits the bill.

Motorola Making A Comeback

Next on our list is Motorola (NYSE:MOT), a mobile phone (among other products) company that many had left for dead in the past couple of years. But it has proven that it still has a place in the industry. Best known for its handsets that dominated the global mobile phone landscape for much of the past 10 years, Motorola has struggled to keep up with the explosive growth of the smart phone market and the emergence of the iPhone. It had trouble keeping up with the smart phone industry's first mover, Research In Motion (Nasdaq:RIMM) - until recently. With the introduction of Google's (Nasdaq:GOOG) Android operating system onto cheaper handsets, including Motorola's Droid phones, companies like Motorola and Nokia (NYSE:NOK) have seen their share prices jump 40% and 25%, respectively, since last summer. Motorola has been able to keep up the momentum through the holiday season, rising 11% in December, as many industry watchers expected its handsets to be popular gift items. The recent announcement that the company will be spinning off its handset and cable set divisions into the newly created Motorola Mobility will allow Motorola to get full value for shareholders wanting to cash in on the company's return to mobile prominence. Add to this that the company will be showcasing its new tablet computer, the Droid Xoom, at CES later this week. Keep an eye on Motorola; 2011 could be a big comeback year.

Microsoft Surprising

Our last addition to this list may come as a bit of a surprise. Microsoft (Nasdaq:MSFT) saw its shares rise 17% in the last quarter of 2010. The tech giant announced strong earnings in its Q1 results in late October, with profit rising 52% over Q1 2009. Stronger corporate spending and wide-scale adoption of its latest Windows 7 operating system had investors putting their money in Microsoft, with hopes that its Windows phone operating system can capture market share away from the big players in the ever-growing smartphone market. Plus, with over $40 billion in cash and short-term equivalents as of the end of September, the possibility of some strategic acquisitions is keeping shareholders hopeful.

Bottom Line
Keep an eye on these three stocks early in 2011 to see if they can keep up their torrid pace. Playing on their momentum could end up being a very profitable venture for tech investors. (To learn more, see our Primer On Investing In The Tech Industry.)

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  5. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  6. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  8. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  9. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. Lion economies

    A nickname given to Africa's growing economies.
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!