The Top Tech Stocks for 2007

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When the Yellow Pages were still the "in" thing, we were told to let our fingers do the walking. Anything, we were told, was just a phone call away.

Fast-forward 20 or so years. Our fingers are no longer walking; they're clicking. And clicking, and clicking, and clicking. Each year, Yahoo! (Nasdaq: YHOO) takes a closer look at our clicks to see who, and what, is hot.

Should investors really be interested to see where Britney ranks this year? (Above former pal Paris, it turns out.) Perhaps not, but there's a startling correlation between the most-searched tech products and the returns of the stocks behind them. Behold:

Company	YTD Return	Products Among the Top 10
Nintendo	138.9%	Nintendo Wii (No. 7)
Apple (Nasdaq: AAPL)	113.4%	iTunes (No. 4), iPod (No. 5), iPhone (No. 6)
Activision (Nasdaq: ATVI)	57%	Guitar Hero (No. 10)
Google (Nasdaq: GOOG)	45.5%	YouTube (No. 1)
Sony (NYSE: SNE)	25.7%	PlayStation 3 (No. 9)
Microsoft (Nasdaq: MSFT)	11.7%	Xbox (No. 8)

Sources: Yahoo!, Yahoo! Finance.

Every one of these firms has been a market-beater in 2007. (The S&P 500 has returned a little less than 4% since January.)

So we should forgo traditional stock screening and invest according to Yahoo's top 10, right? Not necessarily, but it's usually Foolish to investigate the companies that are producing hits. Happily, it's easy to do so, especially if consumer tech is your game. Here are two excellent resources:

1. Yahoo's Buzz Index: The index at buzz.yahoo.com offers a window into the tastes and interests of the U.S. populace at any given moment. Top tech products occasionally make the list. (The Wii is a top search right now.)
   
2. Amazon's best-seller lists: Every Amazon page has a link to best-sellers. And every best-seller page can be narrowed by category. Check these lists to see what's moving up.

What you're looking for are groups of top-selling products made by the same company. These are the hit machines. Such firms may be realizing higher sales, fatter margins, and big returns on investment. And that is always a recipe for healthy returns.

Related Foolishness is just a click away:

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• With three products in Yahoo's top 10, Apple doesn't need to be cheap.