The Fastest-Growing Names in Tech

Forbes has just released its annual list of the top 25 fastest-growing tech names, and much like the Fortune 500, Apple (Nasdaq: AAPL  ) is climbing the ranks. That's particularly interesting considering that most of the companies on this list are small to medium-sized players, yet the colossus from Cupertino fits right in.

Even more interesting is that the list is a veritable Who's Who of official Fool recommendations, especially Rule Breakers, with a few Stock Advisor names thrown into the mix.

The list
Professional social networker and recent Rule Breakers recommendation LinkedIn (NYSE: LNKD  ) scored the No. 1 spot this year, growing its trailing-12-month sales of $522 million by 115%. Apple came in second place with its behemoth $142.4 billion in TTM revenue and 63% revenue growth. For brevity's sake, I won't include the entire list, which can be found here, but will instead list some notable mentions.

Rank

Company

TTM Sales

TTM Sales Growth

3-Year Average Sales Growth

Estimated EPS Growth

Market Cap

1 LinkedIn $522 million 115% 89% 60% $11.1 billion
2 Apple $142.4 billion 63% 43% 18% $568.6 billion
3 Qlik Technologies $337 million 37% 40% 37% $2.1 billion
4 athenahealth $351 million 34% 33% 30% $2.6 billion
5 Equinix $1.7 billion 27% 32% 23% $7.2 billion
6 Ebix $169 million 28% 32% 23% $684 million
8 Riverbed Technology (Nasdaq: RVBD  ) $745 million 24% 31% 20% $2.7 billion
11 Sourcefire $166 million 27% 29% 20% $1.6 billion
15 Ancestry.com (Nasdaq: ACOM  ) $417 million 27% 27% 15% $1.1 billion
18 Rackspace Hosting (NYSE: RAX  ) $1.03 billion 31% 24% 39% $7.7 billion
21 Red Hat $1.1 billion 25% 20% 20% $10.9 billion
25 VeriSign $796 million 14% 11% 12% $6.6 billion

Source: Forbes. Estimated EPS growth is annualized and projected over the next three to five years.

Looking at the TTM revenue and market-cap columns, Apple sticks out like a sore iThumb with its monstrous top line and size. It ranked No. 16 in 2011, moving up by 14 spots this year.

In terms of TTM sales, Cognizant Technology Solutions is the next highest with $6.1 billion, meaning Apple's top line is more than 23 times as big. Cognizant also has the second highest market cap at $18.6 billion, so Apple's capitalization is more than 30 times as large.

Beyond Apple
Riverbed still made the cut this year, although it fell five spots from the No. 3 ranking it earned last year. Its ranking isn't all that's fallen over the year, as shares hit a fresh 52-week low today. The WAN optimization specialist has put up disappointing earnings three out of the past four quarters, with its most recent plunge being the worst. Investors are questioning whether or not the WAN optimization sector has as much growth potential as Riverbed had believed, while the company is looking to expand and become a multiproduct company.

Ancestry.com has been on a roller coaster of late, jumping on its upbeat first-quarter earnings in April, only to get crushed today on news that NBC has opted not to renew Who Do You Think You Are? for a fourth season. Ancestry.com has long been a sponsor of the genealogy-centric show, which has helped drive interest to its genealogy-centric site. In its most recent 10-Q filing, Ancestry.com lists Who Do You Think You Are? as a specific risk factor, noting, "if the show does not continue to be well received or cancelled, it could have a negative effect on our business and our stock price." Investors can only hope the company will be able to broaden its marketing strategy to compensate.

Rackspace is a longtime Rule Breakers pick and has literally earned hundreds of points of outperformance on the service's scorecard, thanks to its top-dog and first-mover advantage in the critical cloud hosting business. Despite increasing competition from e-tail giant Amazon.com, whose Amazon Web Services division has lowered prices 19 times in five years, Rackspace is still putting up stellar growth. Shares tanked after the most recent quarter when earnings per share came in a penny shy, but I agree with fellow Fool Anders Bylund that the drop is really a buying opportunity in disguise.

Next steps
Out of the top 25 fastest growing tech companies, a solid eight are official Rule Breakers recs, with another three sitting on the Stock Advisor scorecard, so almost half have earned Foolish recommendations. Don't forget to sign up for free trials of those respective services if you want to read more, in addition to getting a jump-start on the next batch of recs.

In the meantime, here's a special free report on how to Discover the Next Rule-Breaking Multibagger that shows all six signs of a Rule Breaker, and whose recent plunge may even be a buying opportunity. Grab a free copy before it's too late -- it won't be free forever.

Fool contributor Evan Niu owns shares of Apple, Amazon.com, and Riverbed Technology, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Ancestry.com, Amazon.com, LinkedIn, Apple, and Riverbed Technology. Motley Fool newsletter services have recommended buying shares of Riverbed Technology, athenahealth, Qlik Technologies, LinkedIn, Sourcefire, Ancestry.com, Apple, Rackspace Hosting, Ebix, and Amazon.com, creating a synthetic long position in Riverbed Technology, and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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