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My Top 2 Tech Stocks Now -- and What They're Doing for My Portfolio

Tim Beyers
December 4, 2012

Each week, I report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I've done it before; my last tussle with Mr. Market ended with me beating the index's average return by 13.35%.

Real money was on the line then as it is now, which means any one of the five stocks you see below could cause me a lot of public embarrassment. This time, Google (NASDAQ: GOOG) and Rackspace Hosting (NYSE: RAX) provided the heft need to increase my lead on Mr. Market.

Of the two, Google had the busier week. The search king is working on handling growing interest in an enhanced reality game called Ingress. Players join either the "Enlightened" or the "Resistance" in an online tussle wherein physical locations represent portals that emit exotic energy seen only through the lens of an Android phone. The Matrix, in other words.

But it's also just one way Google is aiming to get more of us using the Internet to enhance the world around us. Last week, the company spent $17 million to acquire BufferBox, a Canadian network of parcel pick-up stations. Clients ship to BufferBox instead of home in order to avoid the fear of missing a package. (NASDAQ: AMZN) has a similar service called Amazon Locker active in the U.S.

No one should be so confused as to believe this buyout will meaningfully contribute to Google's business soon, if ever. But the idea of BufferBox is an interesting one: use the Internet to arrange how we want to receive important mail.

The deal was also the search king's second clash with Amazon last week. Google cut its prices on its Cloud Storage by 20%, only to the see the e-tailer respond with a 25% cut on its S3 online data storage product. Google fired back with another 10% cut. Call it the great data race.

Rackspace rose more than 6% on little news. The only notable comment came from CEO Lanham Napier, who told Investor's Business Daily that Asia "looks attractive" so far as expansion is concerned. Less clear is whether Napier meant expanding Rackspace's data center footprint there or growing the portion of revenue derived from the region. Either way, 25% of sales are currently sourced overseas and most of that comes from the U.K.

What's the Big Idea this week?
Global growth across the portfolio added just the tailwind my portfolio needed to beat the market for the second consecutive week. As a group, my five stocks added another 204 basis points to my lead over Mr. Market.

He's having a hard time deciding which stocks matter and which don't. Blue chips barely nudged with the Dow up 0.12% last week while the small-cap Russell 2000 surged 1.83% and the tech-heavy Nasdaq climbed 1.46%. The S&P 500 also rose but at a more modest 0.49%, according to data supplied by The Wall Street Journal. Here's a closer look at where I stood through Friday's close:


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