What happened

Shares of Extreme Networks (NASDAQ:EXTR) gained 20% in January, according to data from S&P Global Market Intelligence. The networking hardware specialist's big leap rested on its inclusion in a prestigious market index -- but the joy didn't last long.

So what

Extreme Networks was having a quietly positive month, trading just above the S&P 500 market index until Jan. 30. That's when the company was chosen to join the S&P SmallCap 600 market index, and the stock rose as much as 11.5% on the news.

The gains didn't last long. First, Extreme Networks was caught up in the general market meltdown of Feb. 5. Then the company reported second-quarter results, beating Wall Street's earnings targets while falling short on the top line. Share prices fell more than 14% on this mixed report, and Extreme Networks is now trading 7% lower year to date.

An enterprise-grade Ethernet switch, populated with bundles of colorful cables.

Image source: Getty Images.

Now what

Don't cry for Extreme Networks investors, though. At the end of January, share prices had nearly tripled in 52 weeks. It didn't take much of a miss to make some investors take some profits off the table.

Looking ahead, the buyout binge of 2017 has left Extreme Networks in position to challenge Hewlett-Packard Enterprise's (NYSE:HPE) Aruba Networks and Cisco Systems (NASDAQ:CSCO) for contracts across the enterprise networking sector. The stock may look expensive, trading at 730 times trailing earnings today, but the P/E ratio drops all the way to 10.6 if you use forward estimates instead.

Extreme Networks is going places, and I think we'll see it in these monthly top-performer lists again.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Cisco Systems. The Motley Fool has a disclosure policy.