The Nasdaq saw gains of about 21% last quarter, good enough to be its best quarter since all the way back in 1991. With a 21.8 P/E, the Nasdaq definitely isn't cheap anymore, but it's still nowhere near the nauseating P/E levels seen during the technology bubble of the late '90s.
So, what companies were driving the technology world's tremendous growth this past quarter? I've compiled a list of the top five performing hardware stocks of Q1.
Source: S&P Capital IQ. Companies traded on U.S. exchanges and with market caps in excess of $500 million.
Let's look at what's causing some of these companies to explode.
This company designs and builds micro-electronic-mechanical systems (MEMS). Fellow Fool David Meier took the plunge and bought the stock in his real-money portfolio in early December and has been able to ride the stock's enormous gains so far in 2012.
As David points out, while InvenSense's MEMS gained mainstream notability for their placement in the Wii, devices such as tablets and smartphones also create an enormous market for motion-control technology that will use MEMS. InvenSense isn't an Apple
When the floods in Thailand ravaged the hard-drive industry last year, investors fretted that Seagate could see a rough 2012. However, when Seagate released its earnings at the end of January, the company predicted robust demand in the coming quarters. I summed up the company's bullish prediction at that time:
"The company's forecast of $20 billion in sales across 2012 left analysts in a rush to quickly update their models, since Seagate produced just $11.6 billion in sales during 2011. While that future revenue haul is inflated by Seagate digesting Samsung's hard-disk business, it also points to Seagate predicting a much brighter future for its hard drives than Wall Street currently expects."
It's difficult for me to recommend investors buy Seagate as the company approaches all-time highs. I called Seagate the "best technology value play in the market" back in the summer of 2010, but after the recent extreme run-up, it's losing its value-priced pedigree. In the end, the uncertainty the Thai floods have caused in hard-drive pricing makes me leery that the factors driving up Seagate today could fade away in another year.
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