5 More Home-Run Tech Stocks

Welcome to Week 5 of the Big Idea Portfolio. This time, Google (Nasdaq: GOOG  ) received mixed reviews for its new privacy policy as salesforce.com (NYSE: CRM  ) introduced a new customer-support service for small businesses. Details below, but first let's dig into the numbers.

Company

Starting Price*

Recent Price

Total Return

Apple $422.46 $459.68 8.8%
Google $650.09 $596.33 (8.3%)
Rackspace Hosting $41.65 $47.19 13.3%
Riverbed Technology $25.95 $25.92 (0.1%)
Salesforce.com $100.93 $124.10 22.9%
AVERAGE RETURN -- -- 7.32%
S&P 500 SPDR $127.71 $134.54 5.35%
DIFFERENCE -- -- 1.97

Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends and other returns of capital.

Apparently I spoke too soon. For as much as Riverbed Technology's earnings miss cost me last week, substantial rallies in shares of Apple and salesforce.com this week preserved my lead in this three-year contest. Color me grateful. I've been picking stocks long enough to know there's no such thing as a wire-to-wire win in the long game of investing. I'll take what I can get, when I can get it.

No stock has been giving more than salesforce.com recently. Investors bid up the shares after the company on Tuesday introduced a new customer-support service called Desk.com.

As with all salesforce.com software, the system exists entirely online and aggregates questions and requests into a webpage of "cases" that come in by calls, email, or social media. Mobile support allows for agents to handle cases on the go as well. Designed principally for small businesses, the client list includes notable names such as Spotfiy and DirectTV.

Why should investors care? Desk.com is structured similarly to other successful salesforce.com incursions. Typically, it's a three-step process:

  1. Get clients to try the system by offering cheap access.
  2. Hook them with a simple and socially integrated system.
  3. Scale slowly till it becomes the go-to for solving a business problem -- in this case, customer service for small businesses.

If only Google were as subtle. Last weekend, the search king introduced a new privacy policy that drew criticism from Microsoft and others, even if most of us knew the day would come when the Big G would seek to fully integrate its services and customer data to obtain even better data for pitching us ads.

We don't yet know how everything will come together, but frequently asked questions cited in the policy disclosure speak to a long-term vision in which Google acts as sort of extension for your brain. "Users still have to do too much heavy lifting [when it comes to using our services], and we want to do a better job of helping them." Spooky? To a degree, yes. Awesome? I think so.

The week that was
A better-than-expected jobs report sent the Nasdaq to a new 11-year high on Friday, though classic tech stocks were missing from the index's biggest winners. Among the most notable gainers, U.S.-focused Steel Dynamics (Nasdaq: STLD  ) rose on the hope of improving economic conditions.

But it was Facebook that dominated tech and no-tech headlines alike this week. As expected, the social network filed papers to raise $5 billion in a public offering this spring. Most expect the business to be valued between $75 billion and $100 billion in market capitalization, or more than 3 times the value of Google at the time of its IPO in 2004.

The data had many of us taking a closer look at Zynga (Nasdaq: ZNGA  ) while my Foolish colleague Joe Magyer found that, of all the social stocks, Pandora Media (NYSE: P  ) ranks best when it comes to revenue per active user. Get a full visual summary of what Facebook said in its S-1 filing, and read the document directly. My advice? Start at page 66, with CEO and founder Mark Zuckerberg's letter to shareholders.

There's your checkup. See you back here next weekend for more tech-stock talk. In the meantime, you can check out the Fool's latest special report -- "3 Stocks That Will Help You Retire Rich" -- and add the Big Idea portfolio stocks to your Foolish watchlist for ongoing, up-to-the-minute coverage.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple, Google, Rackspace Hosting, Riverbed Technology, and salesforce.com at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Google, salesforce.com, Apple, Microsoft, Rackspace Hosting, and Riverbed Technology, writing covered calls in Riverbed Technology, creating bull call spread positions in Microsoft and Apple, and shorting salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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